Question 10-29 from Managerial Accounting 10th Canadian edition garrison libby and webb

Maxime S.A. is a small company that processes wild mushrooms found in the forests of central France.

Maxime's most popular product is dried chanterelle mushrooms, which are sold in small vacuum packed jars. Each jar contains 15 grams of dried mushrooms.

Fresh mushrooms are purchased for 60 per kilogram in bulk from individuals who gather them from local forests. ( stands for euro, the currency used in France.) Because of imperfections in the mushrooms and normal spoilage, one-quarter of the fresh mushrooms are discarded. Fifteen minutes is the direct labour time required for inspecting and sorting per kilogram of fresh mushrooms. After sorting and inspecting, the acceptable mushrooms are flash-dried, which requires 10 minutes of direct labour time per kilogram of acceptable, sorted, and inspected fresh mushrooms. The flash-drying removes most of the moisture content of the mushrooms and therefore reduces the weight of the acceptable mushrooms by 80%. As a consequence, a kilogram of acceptable fresh mushrooms yields only about 150 grams of dried mushrooms. After drying, the mushrooms are vacuumpacked in small jars and labels are applied. Direct labour is paid at a rate of 12 per hour. The cost of the glass jars, lids, and labels is 10 per 100 jars. The labour time required to pack 100 jars is 10 minutes.

Required: 1. Develop the standard cost for the direct labour and materials cost components of a single jar of dried chanterelle mushrooms, including the costs of the mushrooms, inspecting and sorting, drying, and packing.

2. Gauthier wonders who should be held responsiblethe purchasing manager or the production managerfor the following:

a. The materials price variances for the chanterelle mushrooms. Explain.

b. The materials quantity variances for the chanterelle mushrooms.