Canadian Lawn and Yard Services (CLYS) recently decided to implement a standard costing system for all the different kinds of yard and lawn services it provides to customers. For its “standard” service, it determined the following ideal standards:

Direct materials........................47 kilograms of soil; 20 bunches of foliage
Direct labour.............................10.8 hours

The following additional information is available:

a. Six percent of the soil transported to the customer’s work site is blown away during transportation.

b. For every 10 kilograms of usable soil, half a kilogram is considered unusable and thrown away.

c. For every 10 usable bunches of foliage, one is considered unusable and thrown away.

d. On an average yard, labourers spend 10% of their total work time redoing portions of the work.

e. Yard workers put in seven-hour days including three breaks of 20 minutes each for rest, nutrition, and cleanup.

f. The standard price of direct materials is soil, $7.20 per kilogram, and foliage, $3.50 per bunch.

g. Yard labour is paid at the rate of $12 per hour including benefits.

Required:

1. Compute the practical quantity standards for direct materials and direct labour required to provide “standard” service to a customer. Show all the steps in your calculation.

2. Compute the standard costs of providing “standard” service to a customer.

3. As part of the implementation of a standard costing system at CLYS, John Wakefield (a cost accountant) plans to train those responsible for maintaining the standards on how to use variance analysis. Wakefield is particularly concerned with the causes of unfavourable variances.

a. Discuss possible causes of unfavourable materials price variances, and identify the individual(s) who should be held responsible for these variances.

b. Discuss possible causes of unfavourable labour efficiency variances, and identify the individual(s) who should be held responsible for these variances.