Harvest Sky Pie Company has a reputation for the best apple pies in Bruce county and surrounding areas. Stacy started the company five years ago, baking pies at home, and has experienced wonderful success and growth ever since. The company now has three retail outlets located in Meaford, Chatsworth, and Owen Sound, where the pies are sold for $16 along with a selection of vegetables and fruits brought for sale by area farmers. In anticipation of continued growth, Stacy decided to no longer do-all of the baking herself and has hired two people (Mike and Tom) to help. She has an undergraduate degree in accounting and understands the benefits of standard costing. Knowing that it would be much more difficult to manage the baking of pies and related costs as a result of having employees involved, Stacy implemented a standard costing system. The standard costs are updated monthly.

The standard cost sheet used for July production (previous month) of pies follows:

Raw Material Beginning Ending Inventory Inventory Inventory Used Apples 7,550 kg 6,325 kg ? Brown sugar 10 kg 5 kg 615 kg Dough 35 kg 45 kg 195 kg Oatmeal 8 kg 5 kg 438 kgActual production of pies 1,800 Brown sugar was purchased at (per kg) $1.85 Dough was purchased at (per kg) $1.22 Oatmeal was purchased at (per kg) $1.90 Direct labour: Direct labour hours total cost $16,835 Direct labour hours used 1,300Standard Standard Price/Kg Usage/Pie Apples $1.50 0.72 kg Brown sugar 2.05 0.18 kg Dough 1.11 0.11 kg Oatmeal 1.90 0.30 kg Direct labour 12.80 0.80 hrs * Variable overhead 0.68 0.25 hrs *Fixed overhead 0.20 0.15 hrs