Answered: Suds & Cuts is a local pet grooming…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter6: Process Costing

Section: Chapter Questions

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Question

Suds & Cuts is a local pet grooming shop owned by Collin Bark. Collin has prepared the following standard cost card for each dog bath given:

	Standard Quantity		Standard Rate	Standard Unit Cost
Shampoo	1.4	oz.		$	0.40	per oz.	$	0.56
Water	12	gal.		$	0.04	per gal.		0.48
Direct labor	0.9	hr.		$	9.00	per hr.		8.10

During the month of July, Collin’s employees gave 320 baths. The actual results were 710 ounces of shampoo used (cost of $340.80), 6,200 gallons of water used (cost of $434), and labor costs for 260 hours (cost of $2,756).

Required:

1. Calculate Suds & Cuts direct materials variances for both shampoo and water for the month of July.

2. Calculate Suds & Cuts direct labor variances for the month of July.

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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