Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. Standard Cost per Unit Actual Cost per Unit $ 2.88 $ 3.50 16.20 16.53 Direct materials: Standard: 1.80 feet at $1.60 per foot Actual: 1.75 feet at $2.00 per foot Direct labor: Standard: 0.90 hours at $18.00 per hour Actual: 0.95 hours at $17.40 per hour Variable overhead: Standard: 0.90 hours at $6.00 per hour Actual: 0.95 hours at $5.60 per hour Total cost per unit Excess of actual cost over standard cost per unit 5.40 5.32 $25.35 $24.48 $0.87 The production superintendent was pleased when he saw this report and commented: This $0.87 excess cost is well within the 5 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product." Actual production for the month was 11,500 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials. Required: 1. Compute the following variances for May: a. Materials price and quantity variances. b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 2. How much of the $0.87 excess unit cost is traceable to each of the variances computed in (1) above. 3. How much of the $0.87 excess unit cost is traceable to apparent inefficient use of labor time? Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria's owner has determined that the shop has two major cost driversthe number of pizzas sold and the number of deliveries made. The pizzeria's cost formulas appear below: Fixed Cost per Month Cost per cost per Pizza Delivery $ 5.00 $6,250 $ 780 $ 1.00 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous $2.80 $2.00 $ 800 $ 536 $2,210 $ 900 $ 0.10 In November, the pizzeria budgeted for 2,070 pizzas at an average selling price of $16 per pizza and for 230 deliveries. Data concerning the pizzeria's actual results in November appear below: Pizzas Deliveries Revenue Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous Actual Results 2,170 210 $ 35, 440 $ 10,270 $ 6,190 970 588 $ 1,020 $ 536 $ 2,210 $ 892 Required: 1. Compute the revenue and spending variances for the pizzeria for November. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
