1A1Q JURA CORPORATION IS DEVELOPING STANDARDS FOR THE NEXT YEAR. CUR...

10. CSO: 1A1d LOS: 1A1q

Jura Corporation is developing standards for the next year. Currently XZ-26, one of the

material components, is being purchased for $36.45 per unit. It is expected that the

component’s cost will increase by approximately 10% next year and the price could

range from $38.75 to $44.18 per unit depending on the quantity purchased. The

appropriate standard for XZ-26 for next year should be set at the

a. current actual cost plus the forecasted 10% price increase.

b. lowest purchase price in the anticipated range to keep pressure on purchasing to

always buy in the lowest price range.

c. highest price in the anticipated range to insure that there are only favorable

purchase price variances.

d. price agreed upon by the purchasing manager and the appropriate level of

company management.