MANAGERIAL ACCOUNTING F/MGRS.
5th Edition
ISBN: 9781259969485
Author: Noreen
Publisher: RENT MCG
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Chapter IE, Problem 1E
Activity Variance, Spending Variance, Materials Price Variance, Materials Quantity Variance LO9—1, 9—2, LO9—3, LO10—1
Southside Pizzeria wants to improve its ability to manage the ingredient costs associated with making and selling its pizzas. For the month of June, the company plans to make 1,000 pizzas. It has created a planning budget that includes a cost formula for mozzarella cheese of $2.40 per pizza At the end of June, Southside actually sold 1,100 pizzas, and the actual cost of the cheese that it used during the month was $2,632.
Required:
- What is the mozzarella cheese activity variance for June?
- What as the mozzarella cheese spending variance for June?
- Assume that the company establishes a price standard of S0.30 per ounce for mozzarella cheese and a quantity standard of eight ounces of cheese per pizza. Also, assume that Southside actually used 9,400 ounces of cheese during the month to make 1,100 pizzas.
- What is the materials price variance for mozzarella cheese for June?
- What is the materials quant y variance for mozzarella cheese for June?
- What is the materials spending variance for mozzarella cheese for June?
1.
Expert Solution
To determine
Introduction: Variance means the difference in value which comes when actual figure and estimated or budgeted figure are compared. It is helpful in finding out the cause of difference that arises between figures and formulates the corrective measure, which helps to reduce all those difficulties.
The activity variance for June of Mo cheese.
Answer to Problem 1E
The activity variance for June of Mo cheese is 240 unfavorable.
Explanation of Solution
2.
Expert Solution
To determine
Introduction: Variance means the difference in value which comes when actual figure and estimated or budgeted figure are compared. It is helpful in finding out the cause of difference that arises between figures and formulates the corrective measure, which helps to reduce all those difficulties.
The spending variance for June of Mo cheese.
Answer to Problem 1E
The spending variance for June of Mo cheese is $8 favorable
Explanation of Solution
3.
Expert Solution
To determine
Introduction: Variance means the difference in value which comes when actual figure and estimated or budgeted figure are compared. It is helpful in finding out the cause of difference that arises between figures and formulates the corrective measure, which helps to reduce all those difficulties.
The material price variance, quantity variance, and spending variance for June of Mo cheese.
Answer to Problem 1E
The material price variance is $188 Favorable, quantity variance is $180 Unfavorable, and spending variance is $8 Favorable for June of Mo cheese.
Explanation of Solution
- Material price variance
- Material quantity variance
- Material spending variance
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Activity Variance, Spending Variance, Materials Price Variance, Materials Quantity Variance
Southside Pizzeria wants to improve its ability to manage the ingredient costs associated with making and selling its pizzas. For the month of June, the company plans to make 1,000 pizzas. It has created a planning budget that includes a cost formula for mozzarella cheese of $2.40 per pizza. At the end of June, Southside actually sold 1,100 pizzas and the actual cost of the cheese that it used during the month was $2,632.
Required
1. What is the mozzarella cheese activity variance for June?
2. What is the mozzarella cheese spending variance for June?
3. Assume that the company establishes a price standard of $0.30 per ounce for mozzarella cheese and a quantity standard of eight ounces of cheese per pizza. Also, assume that Southside actually used 9,400 ounces of cheese during the month to make 1,100 pizzas.
a. What is the materials price variance for mozzarella cheese for June?
b. What is the…
3. The following information is available from the KANSAN CORP.:
Actual factory O/H P15,000
Fixed O/H expenses, actual P7,200
Fixed O/H expenses, budgeted P7,000
Actual hours 3,500
Standard hours 3,800
Variable O/H rate per DLH P2.50
Assuming that Tyro uses a three-way analysis of O/H variances, what is the spending variance?
Sales Mix Variance
Ioannis Inc., produces and sells two types of countertop ovens—the toaster oven and the convection oven. Budgeted and actual data for the two models are shown below.
Budgeted Amounts:
ToasterOven
ConvectionOven
Total
Sales:
($1,000 × 25,000)
$25,000,000
($500 × 15,000)
$7,500,000
$32,500,000
Variable expenses
6,250,000
1,500,000
7,750,000
Contribution margin
$18,750,000
$6,000,000
$24,750,000
Actual Amounts:
ToasterOven
ConvectionOven
Total
Sales:
($1,000 × 25,500)
$25,500,000
($500 × 13,500)
$6,750,000
$32,250,000
Variable expenses
6,375,000
1,350,000
7,725,000
Contribution margin
$19,125,000
$5,400,000
$24,525,000
1. Calculate the sales mix variance
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