Instructions: Use formulas and links to cells in the worksheet provided in order to calculate the following variances and answer the questions asked.

1. Given the actual level of activity (number of cases of Nut muesli produced), what are the standard costs? In other words, what would be the costs shown in Muesli AGs flexible budget for Nut muesli?

2. Calculate the material price variances for all the components that go into a box of Nut muesli. (We are concerned only with production variances at this point.) Place your calculations in the column titled Price/Spending Variances. a. Indicate whether the variance is unfavorable or favorable.

3. Calculate the labor rate variance. a. Indicate whether the variance is unfavorable or favorable.

4. Calculate the variable overhead rate variance. a. Indicate whether the variance is unfavorable or favorable.

5. Calculate the materials quantity variances for each of the components that go into a box of Nut muesli. Place your calculations in the column title Efficiency Variances. a. Indicate whether the variance is unfavorable or favorable.

6. Calculate the labor efficiency variance. a. Indicate whether the variance is unfavorable or favorable. 7. Calculate the variable overhead efficiency variance. a. Indicate whether the variance is unfavorable or favorable.

8. Hypothesize as to what could have caused each of these variances. Could what you know about the current labor situation at Muesli AG have contributed to any of these variances? Explain.

9. Which variances should be investigated further? Why?