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could you please to solve this problem which is attached? thank you in advance MANAGEMENT POTATO CHIPS, INC. Management Potato Chips, Inc. produces potato chips
could you please to solve this problem which is attached? thank you in advance
MANAGEMENT POTATO CHIPS, INC. Management Potato Chips, Inc. produces potato chips for dining halls in institutions such as universities, hospitals, etc. The potato chips are sold in large boxes containing 10 pounds of chips. Management's standards indicate 90% of the weight of the chips is potatoes and the other 10% is oil. There is significant scrap in the production of the potato chips; 1/4 of the total potatoes purchased are discarded during the production process, and 1/3 of the oil is wasted. Management expects to pay $0.15/lb. for potatoes and $0.30/lb. for oil. The estimated cost for the box that holds the chips is $0.25 each; the standards have no allowance for wastage of boxes. Direct labor is estimated at 0.05 labor hours per box at a wage rate of $15 per labor hour. Finally all overhead is fixed and is estimated to total $120,000 per quarter. Overhead is allocated on the basis of machine hours. The standard for a box of chips is 0.16 machine hours. For the first quarter of 20x4, Management expected to produce and sell 30,000 boxes of chips; the expected sales price was $21/box. Actual results did not match expectations. During the quarter a total of 29,000 boxes were produced while 28,000 boxes were sold at $22/box. Management purchased and used 360,000 pounds of potatoes for $50,400. Management purchased and used 50,000 pounds of oil for $15,500. Finally, Management purchased and used 30,000 boxes at a cost of $6,900. Labor costs were $20,800 for 1,300 labor hours. Fixed overhead costs totaled $115,000, and 5,000 machine hours were used. Unless it says otherwise, assume the company uses a standard, absorption costing system. Required: A1. What is the standard cost per unit? A2. Compute all production cost variances for the quarter. A3. If the company were to use a normal costing system, what would be the normal cost per unit? A4. If the company were to use an actual costing system, what would be the actual cost per unit? A5. Management put together a master budget at the beginning of the quarter. What was the expected gross margin for the quarter? A6. What was the reported gross margin for the quarter? A7. What is the sales price variance for the quarter? A8. What was the sales volume variance (comparing the gross margins on the master budget and the flexible budget) for the quarter? A9. What are the advantages and disadvantages of standard, normal and actual costing systemsStep by Step Solution
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