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Setting Standards

Exercise 10-8 Setting Standards [LO1]
Czar Nicholas Chocolatier, Ltd. makes premium handcrafted chocolate confections in London. The owner of the company is setting up a standard cost system and has collected the following data for one of the company's products, the Imperial Truffle. This product is made with the finest white chocolate and various fillings. The data below pertain only to the white chocolate used in the product.

Material requirements, kilograms of white chocolate per dozen truffles 0.80 kilograms
Allowance for waste, kilograms of white chocolate per dozen truffles 0.02 kilograms
Allowance for rejects, kilograms of white chocolate per dozen truffles 0.03 kilograms
Purchase price, finest grade white chocolate £ 9.00 per kilogram
Purchase discount 5 % of purchase price
Shipping cost from the supplier in Belgium £ 0.20 per kilogram
Receiving and handling cost £ 0.05 per kilogram
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Requirement 1:
Determine the standard price of a kilogram of white chocolate. (Omit the "£" sign in your response. Round your answer to 2 decimal places.)

Standard price £

Requirement 2:
Determine the standard quantity of white chocolate for a dozen truffles. (Round your answer to 2 decimal places.)

Standard quantity
kilograms

Requirement 3:
Determine the standard cost of white chocolate for a dozen truffles. (Omit the "£" sign in your response. Round your answer to 2 decimal places.)

Standard cost £

Hint 1

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Solution Summary

The solution explains how to determine the standard quantity and standard price for an item

$2.19