Starlight.com Starlight.com manufactures bottled wine for retail chains. John Tsang, the controller, believes that the company's...

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Starlight.com Starlight.com manufactures bottled wine for retail chains. John Tsang, the controller, believes that the company's standard-costing system is ineffective. An independent consultant implemented the system. John has rarely seen an unfavorable variance of any magnitude in the last six months. Yet, he informally observes that workers seem to have plenty of time to chat about new fads sweeping America, such as the Australian Meat Pie. An extract from the most recent monthly production report is as follows:- Standard Wine Inputs Per Bottle: 0.1 of a barrel at $50 per barrel = $5 per bottle. Standard Direct Labor Inputs Per Bottle: 0.25 hours at $18 per hour = $4.50 per bottle. Actual cost of Wine Inputs used = $20,196 Actual cost of Direct Labor used = $18,462 Actual Wine Inputs used = 408 barrels of inputs. Actual Direct Labor hours worked = 1,020 hours Actual output achieved = 4,488 bottles of wine. At a recent industry conference, John participated in seminars on "Benchmarking in the Wine Industry". A consultant for the Benchmarking Clearing House showed how she could develop monthly benchmark reports on the estimated costs of Starlight.com's major competitors. She indicated that she already was examining the estimated cost of bottled wine manufactured by the four largest American importers. These importers had taken much business from Starlight.com in recent years. This information would soon be available by subscribing to the Benchmark Clearing House monthly service. Starlight.com Starlight.com manufactures bottled wine for retail chains. John Tsang, the controller, believes that the company's standard-costing system is ineffective. An independent consultant implemented the system. John has rarely seen an unfavorable variance of any magnitude in the last six months. Yet, he informally observes that workers seem to have plenty of time to chat about new fads sweeping America, such as the Australian Meat Pie. An extract from the most recent monthly production report is as follows:- Standard Wine Inputs Per Bottle: 0.1 of a barrel at $50 per barrel = $5 per bottle. Standard Direct Labor Inputs Per Bottle: 0.25 hours at $18 per hour = $4.50 per bottle. Actual cost of Wine Inputs used = $20,196 Actual cost of Direct Labor used = $18,462 Actual Wine Inputs used = 408 barrels of inputs. Actual Direct Labor hours worked = 1,020 hours Actual output achieved = 4,488 bottles of wine. At a recent industry conference, John participated in seminars on "Benchmarking in the Wine Industry". A consultant for the Benchmarking Clearing House showed how she could develop monthly benchmark reports on the estimated costs of Starlight.com's major competitors. She indicated that she already was examining the estimated cost of bottled wine manufactured by the four largest American importers. These importers had taken much business from Starlight.com in recent years. This information would soon be available by subscribing to the Benchmark Clearing House monthly service.

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