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Accounting and Finance Essentials. Presented by Bill Moylan. STANDARD COSTS. Ginny’s Vermont Treats. Ginny decides to start a business making and selling Vermont Maple Syrup and Maple Treats, and calls it “Ginny’s Vermont Treats” (GVT). GVT Standard Costs.

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accounting and finance essentials

Accounting and Finance Essentials

Presented by

Bill Moylan

ginny s vermont treats
Ginny’s Vermont Treats
  • Ginny decides to start a business making and selling Vermont Maple Syrup and Maple Treats, and calls it “Ginny’s Vermont Treats” (GVT)
gvt standard costs
GVT Standard Costs
  • Let’s assume we make and sell two maple-based product lines:
  • Maple Syrup, available in 8 oz., 15 oz., and 24 oz. sizes
  • Maple Candy Gift Boxes, available in 2 oz. and 6 oz. sizes
ginny s vermont treats1
Ginny’s Vermont Treats
  • Has lined up suppliers for maple syrup, jars, and labels for the Syrup product line, and confection mix and packaging for the Candy Gift Box product line
  • Plans to use local labor for product processing and packaging
  • She has supplier cost quotes, and her own time and motion studies for labor time requirement to fill/package product.
standard cost
Standard Cost
  • An estimated or predetermined cost of performing an operation or producing a good or service, under normal conditions.
standard cost1
Standard Cost
  • Standard costs are used as target costs (or basis for comparison with the actual costs), and are developed from historical data analysis or from time and motion studies.
standard costs 6 oz gift box
Standard Costs: 6 oz. Gift Box
  • Mix: $4
  • Packaging: $1
  • Labor: $1
  • Total: $6
gvt costs syrup line
GVT Costs—Syrup Line
  • Maple syrup (bulk): $319 (5 gallon drum)
  • Jars: 8 oz: $.76 15 oz: $.82 24 oz: $.94
  • Labels: $.022
  • Labor (time requirement) for Syrup (per jar): 8 oz: .85 minutes 15 oz: 1 minute 24 oz: 1.2 minutes
  • Labor Costs: $10/hr (standard). $15/hr (OT)
gvt costs syrup line1
GVT Costs—Syrup Line
  • We know from experience that we “waste” about 10% of all syrup due to spillage, run off, etc. Further, experience shows us that 3% of all jars get scrapped, and 5% of labels have to be scrapped.
  • The cost of “waste” materials have to be factored in to the standard product cost.
gvt costs candy gift box line
GVT Costs—Candy Gift Box Line
  • Confection mix: $113 (10 lb. sack)
  • Packaging: 2 oz box: $.82 6 oz box: $1.48
  • Labor (time requirement) for Gift Box Line (per box): 2 oz box: 2.5 minutes 6 oz: 5.0 minutes
  • Labor Costs: $10/hr (standard). $15/hr (OT)
gvt costs candy gift box line1
GVT Costs—Candy Gift Box Line
  • Experience tells us we have these scrap levels for the Candy line:
  • 6% confection mix
  • 2% packaging
what are the standard costs
What are the Standard Costs?
  • 8 oz Syrup: ?
  • 15 oz Syrup: ?
  • 24 oz Syrup: ?
  • 2 oz Candy Gift Box: ?
  • 6 oz Candy Gift Box: ?
what are the standard costs1
What are the Standard Costs?
  • There is a tab on the Accounting Exercises Excel file with all these numbers.
standard cost exercise answers
Standard Cost Exercise Answers
  • You’ll just have to come to class October 14!