WesternSugarprocessessugarbeets into granulatedsugarthat is sold to food companies. It uses a standard cost system to aid in cost control and performance evaluation. To compute the standards for next year, the actual expense incurred by expense category is divided by the bushels ofsugarbeets processed to arrive at a standard cost per bushel. These per-bushel standards are then increased by the expected amount of inflation forecast for that expense category. This year.WesternSugarprocessed 63 million bushels of beets. The accompanying table calculates next year's standard costs.

WESTERN SUGAR Standard Costs Next Year ($000s) This Year's Cost per Inflation Standard Cost Cost Bushel Adjustment per Bushel Direct labor $33,000 $0.524 4.0% $0.544 Sugar beets 58,000 0.921 3.5 0.953 Variable overhead 24,000 0.381 5.0 0.400 Fixed overhead 43.000 0.683 2.0 0.696 Total $158,000 $2.509 $2.593 Next year, actual production is 68 million bushels. At the end of next year, the following report is prepared: WESTERN SUGAR Actual Results Compared with Standard Next Year ($000s) Actual Standard Cost Standard Variance Cost per Bushel Cost Direct labor $ 38,100 $0.544 $ 36,992 $1,108 U Sugar beets 64,829 0.953 64,804 25 U Variable overhead 28.211 0.400 27,200 1,011 U Fixed overhead 45.227 0.696 47,328 2,101 F Total $176,367 $2.593 $176,324 $ 43 U