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An ice-cream company has been growing steady in popularity for the past 2 years, hence production has expanded to cater for the increased demand of
An ice-cream company has been growing steady in popularity for the past 2 years, hence production has expanded to cater for the increased demand of its varied ice cream flavours. Management has recently been concerned with an increase in customer complaints about its products tasting different and not as good as before. Having consulted the respective managers, the following variances were noted: Direct materials quantity variance: Favourable Direct labour efficiency variance: Favourable Direct labour rate variance: Favourable Required: 4 marks The favourable variances above have resulted in poor customer satisfaction. For each scenario (a) and (b), refer to a different combination of 2 specific variances and explain how they interact to drive this outcome
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