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# Rapid Repair Services: management accounting problems

1) 11: 3
Standard costs facilitate management planning. What are the other advantages of standard costs?

2) 11:5
Distinguish between an ideal standard and a normal standard.

3) 8: 4

Stine Corporation produces a filter that has a per unit cost of \$17. The company would like a 30% markup. Using cost-plus pricing, determine the per unit selling price.

4) 8: 7
Livingston Corporation manufactures an electronic switch for dishwashers. The cost base per unit, excluding selling and administrative expenses, is \$60. The per unit cost of selling and administrative expenses is \$20. The company's desired ROI per unit is \$6. Calculate its markup percentage on total unit cost.

E11-4

Compute labor quantity variance.
(SO 3, 4)
Rapid Repair Services, Inc. is trying to establish the standard labor cost of a typical oil change. The following data have been collected from time and motion studies conducted over the past month.
Actual time spent on the oil change 1.0 hour
Hourly wage rate \$10
Payroll taxes 10% of wage rate
Setup and downtime 10% of actual labor time
Cleanup and rest periods 30% of actual labor time
Fringe benefits 25% of wage rate

Instructions
a. Determine the standard direct labor hours per oil change.
b. Determine the standard direct labor hourly rate.
c. Determine the standard direct labor cost per oil change.
d. If an oil change took 1.5 hours at the standard hourly rate, what was the direct labor quantity variance?

#### Solution Preview

11: 3: Standard costs facilitate management planning. What are the other advantages of standard costs?
· Facilitate management planning
· Used for setting final price (selling price) for the product
· Used as a basis to compare the actual and planned costs and thereby helps in management control
· Create a culture of cost efficiency and productivity by making people in the organization aware of the costs
· Reduce the cost of account management for inventory; work in process and finished goods.
· Used in calculation of cost variances (labor, material, etc) to help in "management by exception"
· They promote greater economy by making employees more "cost-conscious."

11:5: Distinguish between an ideal ...

#### Solution Summary

Management accounting problems for Rapid Repair Services are examined.

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