TCC Industries Ltd produces speciality tyres in a variety ofsizes and tread designs for use on trailers and farm equipment. TCCis planning to implement a standard cost accounting system. ValerieSiewert, the accountant, has accumulated the following informationon the standard cost of a particular bias tractor tyre. Each tyrerequires 15 kilograms of carbon black, the basic tyre component,which is added in the mixing department. Other materials, such aszinc and sulphur, which are added in the moulding department, arerequired in such small quantities that they are treated as indirectmaterials and included as part of overhead. Each tyre requires 15minutes of processing time to mould and cure. An additional 45minutes of time is required to mix the ingredients in the mixingdepartment. The standard cost for carbon black is $3.50 perkilogram. The standard cost of direct labour in the mixingdepartment is $10 per labour hour, while the standard cost ofdirect labour in the moulding department is $11 per hour. Requireda) Develop the standard cost of materials and labour for thetractor tyre. The standard cost should identify the standardquantity, the standard rate and the total standard cost per unit.(3 marks) b) Identify the advantages of implementing a standardcost system. (2 marks) c) Explain the role each of the followingpeople would have in developing the standard costs: (5 marks) 1-Purchasing Power 2- Mixing department supervisor 3- Mouldingdepartment supervisor 4- Cost accountant 5- Product engineer
TCC Industries Ltd produces speciality tyres in a variety ofsizes and tread designs for use on trailers and farm equipment. TCCis planning to implement a standard cost accounting system. ValerieSiewert, the accountant, has accumulated the following informationon the standard cost of a particular bias tractor tyre. Each tyrerequires 15 kilograms of carbon black, the basic tyre component,which is added in the mixing department. Other materials, such aszinc and sulphur, which are added in the moulding department, arerequired in such small quantities that they are treated as indirectmaterials and included as part of overhead. Each tyre requires 15minutes of processing time to mould and cure. An additional 45minutes of time is required to mix the ingredients in the mixingdepartment. The standard cost for carbon black is $3.50 perkilogram. The standard cost of direct labour in the mixingdepartment is $10 per labour hour, while the standard cost ofdirect labour in the moulding department is $11 per hour. Requireda) Develop the standard cost of materials and labour for thetractor tyre. The standard cost should identify the standardquantity, the standard rate and the total standard cost per unit.(3 marks) b) Identify the advantages of implementing a standardcost system. (2 marks) c) Explain the role each of the followingpeople would have in developing the standard costs: (5 marks) 1-Purchasing Power 2- Mixing department supervisor 3- Mouldingdepartment supervisor 4- Cost accountant 5- Product engineer
