The Cake Factory uses a standard costing system in order to promote efficiency in its giant doughnut
Question:
The Cake Factory uses a standard costing system in order to promote efficiency in its giant doughnut manufacturing process.
Company data for the year 2021:
Standard quantity of dough per doughnut 0.50 kilograms
Standard rate per kilogram of dough $ 0.50
Standard baking labor rate per baking hour $12.00 per hour
Standard baking hours per doughnut 0.25 hours
Expected Production Output 4000 units
Actual Production Output Achieved 3500 units
Fixed Overhead Rate (Based on expected production) $1.00 per unit
Variable marketing $1.00 per unit
Fixed Marketing $10,000.00
Variable Overhead Rate per doughnut $ 0.60 per doughnut
Actual Unit Variable Costs of Production $ 4.04
Actual and Budgeted Fixed Costs of Production $4000.00
Selling Price $10.00
Beginning Finished Goods Inventory 0 units
Beginning WIP 0 units
Ending WIP 0 units
Units Sold 3000 units
Required:
- Prepare, applying standard costs, an absorption costing income statement adjusting cost of goods sold for all manufacturing cost variances.
- What are the potential implications of using absorption costing income for
evaluating the production manager's performance?
- What controls or measures can the controller implement to minimize or eliminate the concerns outlined in requirement 2?
Expert Answer:
a Adjusted Standard Cost of Goods Sold 3500404450 378022 Income Statement Sales 35000 Cost of Goods ... View the full answer
