1 Reed Cake Company makes and sells cakes to retail stores. One of the companys most popular cakes is carrot cake, which sells for $8.00 per pound. The standard cost per pound of carrot cake is presented below. The following cost information is based on the companys normal monthly production of 400,000 pounds. Cost Item Quantity Standard Unit Cost Total Cost Direct materials: Cake mix 10 oz. $ .02 per oz. $ .20 Corn Syrup 5 oz. .15 per oz. .75 Carrots 1 oz. .50 per oz. .50 Direct labor:* Mixing 1 min. $14.40 per hr. $ .24 Baking 2 min. 18.00 per hr. .60 Variable overhead 3 min. $32.40 per direct-labor hr. $1.62 Total standard cost per pound $3.91 *Direct-labor rates include employee benefits. Applied on the basis of direct-labor hours. By using these standard costs, Isabel Faia, management accountant of the company, prepares monthly budget reports for November. The variance report is presented below. Variance Report for November Static Budget Actual Variance Units (in pounds) 400,000 450,000 50,000 F Revenue $3,200,000 $3,555,000 $355,000 F Direct material $ 580,000 $ 865,000 $285,000 U Direct labor 336,000 348,000 12,000 U Variable overhead 648,000 750,000 102,000 U Total variable costs $1,564,000 $1,963,000 $399,000 U Contribution margin $1,636,000 $1,592,000 $ 44,000 U

2 Mia Murray, president of the company, is not satisfied with the results because the products contribution margin decreased. Murray has asked Faia to investigate this decrease and Faia has prepared the following report for the analysis. Report for November Cost Item Actual Quantity Actual Cost Direct materials: Cake mix 4,650,000 oz. $ 93,000 Corn Syrup 2,660,000 oz. 532,000 Carrots 480,000 oz. 240,000 Direct labor: Mixing 450,000 min. 108,000 Baking 800,000 min. 240,000 Variable overhead 750,000 Total variable costs $1,963,000 Required: Compute the following variances. Indicate whether a variance is favorable or unfavorable. 1. Direct-material price variance (1 point) 2. Direct-material quantity variance (1 point) 3. Direct-labor efficiency variance (1 point) 4. Variable-overhead spending variance (1 point) 5. Variable-overhead efficiency variance (1 point)