Tetra Corporation produces glass shelves that are used in furniture. Each shelf requires 4.0 pounds of raw material at a cost of $3 per pound. Unfortunately, given the nature of the manufacturing process, one out of every four shelves is chipped, scratched, or broken at the beginning of production and has to be scrapped.
On average, 25 good shelves are completed during each hour. Labourers who work on these units are paid $18 per hour.
Required:
A. Distinguish between perfection standards and practical standards.
B. Who within an organization would be in the best position to assist in setting the:
1. direct-material price standard?
2. direct-material quantity standard?
3. direct-labour efficiency standard?
4. Calculate a practical direct-material and direct-labour standard for each good shelf produced.

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The Answer of Tetra Corporation produces glass shelves that are used in furniture. Each shelf requires 4.0 pounds of raw material at a cost of $3 per pound. Unfortunately, given the nature of the manufacturing process, one out of every four shelves is chipped, scratched, or broken at the beginning of production and has to be scrapped.
On average, 25 good shelves are completed during each hour. Labourers who work on these units are paid $18 per hour.
Required:
A. Distinguish between perfection standards and practical standards.
B. Who within an organization would be in the best position to assist in setting the:
1. direct-material price standard?
2. direct-material quantity standard?
3. direct-labour efficiency standard?
4. Calculate a practical direct-material and direct-labour standard for each good shelf produced.

Tetra Corporation Produces Glass Shelves That Are Used in Furniture