Jone FarmsJone Farms manufactures the bags of frozen french fries used at many restaurants. Last week, Jone FarmsJone Farms purchased (transferred in from its potato farms) and used

103,000kg of potatoes at a price of $0.70 per kilogram. During the week, 2,400direct labour hours were incurred in the plant at a rate of $12.30 per hour. The standard price per kilogram of potatoes is $0.85, and the standard direct labour rate is $12.15 per hour. Standards indicate that for the number of bags of frozen fries produced, the factory should have used 99,000 kg of potatoes and 2,200 hours of direct labour.

Requirements

1. Determine the direct materials price and efficiency variances. Be sure to label each variance as favourable or unfavourable.

2. Think of a plausible explanation for the variances found in Requirement 1.

One plausible explanation is that Jone FarmsJone Farms boughtprice, which resulted in the____price variance. However, because the potatoes were____As a result, the manufacturing facility____potatoes than standards allow. This accounts for the___efficiency variance.

3. Determine the direct labour price and efficiency variances. Be sure to label each variance as favourable or unfavourable.

4. Could the explanation for the labour variances be tied to the material variances? Explain.

The labour price and efficiency variances be tied to the material variances. For example, if the material variances were the result of purchasing then the factory would uselabour in sorting the potatoes. As a result, it would have had to pay workers

.