Zane is a sole trader who started as a street vendor and has grown her business...

Transcribed Image Text:

Zane is a sole trader who started as a street vendor and has grown her business into food trucks that operate in the industrial zone and other hotspot areas. One of her food trucks is in Epping where she sells, fat cakes, hot chips and bunny chows. Her food trucks are becoming a household name in Cape Town area. Zane would like to offer the same standard of quality for all her customers across different areas. Each food truck has its own manager who runs the operations of the truck. Zane has reached out to you, a recent graduate at UCT to help her implement Standard costing. She heard that standard costing helps in achieving consistency in the quality of products at a recent SME Indaba she attended. Zane has tried to implement the Standard costing system but was unsure how the results should be interpreted. She asked that you apply standard costing on fat cakes first before you move on to other products. Fat cakes are made from white bread flour, yeast, water, and then deep friend in hot cooking oil. The war in Russia and Ukraine has led to a huge increase in cost of cooking oil. This pressure on costs has prioritised the need for cost control to improve her profitability. Zane is reluctant to increase her prices given the sensitivity of the market she serves. Zane last updated the standards six (6) months ago and is concerned that her standards may be outdated. Zane is of the view that standards should be updated more regularly. The following table shows the standard cost for a batch of 30 units of fat cakes. Inputs R Direct material (white bread 3kg @ R13.60/kg 40.80 flour) Cooking oil ? @R 95/Litre ? Direct labour 30 min @ R25/hour 12.50 Manufacturing overheads Standard cost per batch 30 min @ 20 R40/hour ? Additional information 1. Zane had budgeted to produce 7 200 units for the month. However, she managed to actually produce and sell only 6 750 units during the month. 2. Amo, a manager at Zane's food truck continuously shops around different food retailers to find cheaper production inputs. Amo purchased an unfamiliar brand of white bread flour that was on promotion at ShopRyt for R150 per 12.5kg bag. The price was a bargain given that food prices have been increasing in the past few months. She purchased 95 Zane is a sole trader who started as a street vendor and has grown her business into food trucks that operate in the industrial zone and other hotspot areas. One of her food trucks is in Epping where she sells, fat cakes, hot chips and bunny chows. Her food trucks are becoming a household name in Cape Town area. Zane would like to offer the same standard of quality for all her customers across different areas. Each food truck has its own manager who runs the operations of the truck. Zane has reached out to you, a recent graduate at UCT to help her implement Standard costing. She heard that standard costing helps in achieving consistency in the quality of products at a recent SME Indaba she attended. Zane has tried to implement the Standard costing system but was unsure how the results should be interpreted. She asked that you apply standard costing on fat cakes first before you move on to other products. Fat cakes are made from white bread flour, yeast, water, and then deep friend in hot cooking oil. The war in Russia and Ukraine has led to a huge increase in cost of cooking oil. This pressure on costs has prioritised the need for cost control to improve her profitability. Zane is reluctant to increase her prices given the sensitivity of the market she serves. Zane last updated the standards six (6) months ago and is concerned that her standards may be outdated. Zane is of the view that standards should be updated more regularly. The following table shows the standard cost for a batch of 30 units of fat cakes. Inputs R Direct material (white bread 3kg @ R13.60/kg 40.80 flour) Cooking oil ? @R 95/Litre ? Direct labour 30 min @ R25/hour 12.50 Manufacturing overheads Standard cost per batch 30 min @ 20 R40/hour ? Additional information 1. Zane had budgeted to produce 7 200 units for the month. However, she managed to actually produce and sell only 6 750 units during the month. 2. Amo, a manager at Zane's food truck continuously shops around different food retailers to find cheaper production inputs. Amo purchased an unfamiliar brand of white bread flour that was on promotion at ShopRyt for R150 per 12.5kg bag. The price was a bargain given that food prices have been increasing in the past few months. She purchased 95

Answer rating: 100% (QA)

To implement standard costing for the fat cakes produced by Zanes food trucks we need to calculate t... View the full answer