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1. Assume each Starbucks store tracks direct labor and direct material costs for each of its drinks, with the stan- dard costs for a single
1. Assume each Starbucks store tracks direct labor and direct material costs for each of its drinks, with the stan- dard costs for a single grande cappuccino as follows: Labor $0.40 Coffee 0.70 Dairy products 0.35 Cup and lid 0.07 Stirrers, napkins 0.03 Suppose actual output for one week is 1,000 grande cappuc- cino drinks. The actual total cost of coffee used to make these drinks was $730. The manager of the store has no control over the price paid for the coffee provided by Starbucks- this is a predetermined price. What is the total direct materi- als variance for coffee for this drink? Is this a price or an effi- ciency variance? Is it favorable or unfavorable? Why? 2. Nonfinancial measures are important to the operations of each Starbucks. For example, cleanliness of public areas is one such measure. Another measure covers achieving the company's "third place" concept (in which home and work are the first two places in a person's life, Starbucks is third). What other nonfinancial measures do you think the company might use? Why do nonfinancial measures mat- ter in cost accounting
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