Question
Apple Valley Orchards, Inc. (AVO), developed standard costs for direct material and direct labor. In 2011, AVO estimated the following standard costs for one of
Apple Valley Orchards, Inc. (AVO), developed standard costs for direct material and direct labor. In 2011, AVO estimated the following standard costs for one of their most well-loved products, the AVO classic Grandma's large apple pie which had a brown sugar coating on the top of the crust as well as including cranberry and mince ingredients in addition to the apples.
Budgeted quantity Budgeted price
Direct materials 1.5 pounds $7.25 per pound
Direct labor 0.25 hours $14.00 per hour
During September, AVO produced and sold 1,200 pies using 1,875 pounds of direct materials at an average cost per pound of $7.00 and 280 direct labor hours at an average wage of $14.25 per hour. Also, state if the variance is favorable or unfavorable for each answer below.
A) September's direct material flexible-budget variance is:
B) September's direct material price variance is:
C) September's direct material efficiency variance is:
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