Non-financial variances. Daisy Canine Products produces high quality dog food distributed only through veterinary offices. To ensure that the food is of the highest quality and has taste appeal, Daisy has rigorous inspection process. For quality control purposes, Daisy has a standard based on the pounds of food inspected per hour and the number of pounds that pass or fail the inspection. Daisy expects that for every 10,000 pounds of food produced, 1,000 pounds of food will be inspected: Inspection of 1,000 pounds of dog food should take 1 hour. Daisy also expects that 2% of the food inspected will fail the inspection. During the month of May, Daisy produced 2,250,000 pounds of food and inspected 200,000 pounds of food in 210 hours. Of the 200,000 pounds of food inspected, 3,500 pounds of food failed pass the inspection.

1. Compute two variances that help determine whether the time spent on inspections was more or less than expected. (Follow a format similar to the one used for the variable overhead spending and efficiency variances, but without prices.)

2. Compute two variances that can be used to evaluate the percentage of the food that fails the inspection.