Standard Cost Sheet Singh Company is a small manufacturer of wooden household items. Al Rivkin, corporate controller, plans to implement a standard cost system. He has information from several co-workers that will help him develop standards for Singh's products.
One product is a wooden cutting board. Each cutting board requires 1.25 board feet of lumber and 12 minutes of direct labor time to prepare and cut the lumber. The cutting boards are inspected after they are cut. Because they are made of a natural material that has imperfections, one board is normally rejected for each five boards accepted. Four rubber pads are attached to the corners of each good cutting board. A total of 15 minutes of direct labor time is required to attach all four pads and finish each cutting board. The lumber for the cutting boards costs $10 per board foot, and each pad costs 50 cents. Direct labor is paid at the rate of $18 per hour.
Required:
1. Develop the standard cost sheet for the direct manufacturing cost components of the cutting board. For each direct cost component, the standard cost should identify the following:
a. Standard quantity.
b. Standard rate.
c. Standard cost per unit of output.
2. Identify the advantages of implementing a standard costing system.
3. Explain the role of each of the following persons in developing standards:
a. Purchasing manager.
b. Industrial engineer.
c. Cost accountant.