As a CPA, one of your clients asks you whether his manufacturing

| December 10, 2018

1. As a CPA, one of your clients asks you whether his manufacturing company should include standard costs in their cost accounting system. List at least two reasons for including standard costs in your client’s cost accounting system and two potential problems with including standard costs in the client’s cost accounting system.2. Southern Pecan Company grows and sells pecans. The company harvested 10,000 bags of pecans in May and sold everything that it harvested. The company’s flexible budget for May was:Bags sold10,000Revenue ($10/bag)$100,000Expenses:Bags ($.50 each)$ 5,000Pecan orchard maintenance$ 10,000Wages and salaries ($2,400 + $.50 per bag)$ 7,400Shipping ($.40 per bag)$ 4,000Other expenses ($1,000 + $.45 per bag)$ 5,500Total Expenses$ 31,900Net operating income $ 68,100The actual results for May were:Bags sold10,000Revenue ($10/bag)$105,000Expenses:Bags ($.50 each)$ 5,100Pecan orchard maintenance$ 9,000Wages and salaries ($2,400 + $.50 per bag)$ 7,900Shipping ($.40 per bag)$ 5,000Other expenses ($1,000 + $.45 per bag)$ 5,600Total Expenses$ 32,600Net operating income $ 72,400Prepare a report detailing the company’s revenue and spending variances of May.3.With the following information, compute the throughput time and the manufacturing cycle efficiency:Wait time12.0 daysInspection time0.9 daysProcessing time3.5 daysMove time0.2 daysQueue time2.0 daysFor problems, be sure to answer all questions and provide all requested information.4. What are the”exceptions” that management by exception considers? How does consideration of these”exceptions” assist a business in evaluating its performance?

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