Chapter 10- Homework

Operations Budget

Use the following information to calculate the revenue variances; price, volume, and price volume:

The Flagstaff Caf budgeted sales of 6,000 meals this month at an average price of $23 per meal. Actual sales were 6,300 at an average price of $25 per meal.

Calculate the budget variance- is it favorable or unfavorable?

Calculate the price variance- is it favorable or unfavorable?

Calculate the volume variance- is it favorable or unfavorable?

Calculate the price-volume variance- is it favorable or unfavorable?

Use the following information to calculate the Cost of Good Sold Variances; cost, volume, and cost-volume.

Biscuits Bistro expected to have sales this month of 2,000 meals with an average cost per unit of $6. Actual sales were 1,900 units at an average cost per unit of $5.

Calculate the cost variance- is it favorable or unfavorable?

Calculate the volume variance- is it favorable or unfavorable?

Calculate the cost-volume variance- is it favorable or unfavorable?

Use the following information to solve for the variable labor variances; volume, rate, and efficiency.

	Units	Time/Unit	Total time (calculations below)	Hourly Wage	Total (Hourly wage* total time)
Budgeted	500	12 min	100 hours	$12.00	$1,200
Actual	660	10 min	110 hours	$12.50	$1,375

*Total time budgeted= 500 units * 12 min each = 6,000 minutes / 60 min per hour = 100 hours

**Total time actual= 660 units * 10 min each= 6,600 minutes / 60 min per hour = 110 hours

First calculate the allowable time for actual output (ATAO) by multiplying the actual number of units by the budgeted time per unit, then converting the minutes to hours.

Calculate the volume variance- is it favorable or unfavorable?

Calculate the rate variance- is it favorable or unfavorable?

Calculate the efficiency variance-- is it favorable or unfavorable?