Activity-based costs, variance analysis. A manufacturer of a variety of pastry products, Tasty Pastry has one of
Question:
Activity-based costs, variance analysis. A manufacturer of a variety of pastry products, Tasty Pastry has one of its plants producing five different fruit-cake products. Each cake product differs in terms of material inputs (different fruits, flour, and liquor). They are identi- cal in terms of both the cooking and the setup processes. Tasty Pastry prefers to make long production runs of each cake product. A major bene- fit is that fewer changeovers are made. A changeover is the process of switching the produc- tion line from the manufacture of one product to another product. The costs of a changeover are a batch cost. They comprise the labour cost of the workers who clean the mixing equip- ment so that the contents of each different product are not mixed together. The following information pertains to March 2010.
REQUIRED 1. Compute the flexible-budget variance for total changeover labour costs in March 2010.
Comment on the results.
2. Compute the price and efficiency variance for total changeover labour costs in March 2010. Comment on the results.
3. Provide two explanations for each of the price and efficiency variances in requirement 2.LO1
Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 9780135004937
5th Canadian Edition
Authors: Charles T. Horngren, Foster George, Srikand M. Datar, Maureen P. Gowing