Please describe the circumstances of the following case study and recommend a course of action. Explain your approach to the problem, perform relevant per unit calculations and analysis, and formulate a recommendation. Ensure your work and recommendation are thoroughly supported.

Case Study:

Papaya Partners is a distributor of papayas. They purchase papayas from individual growers and package them in 10-pound cartons for delivery to their various customers, generally supermarkets. Last month, they budgeted to sell $500,000 worth of cartons at a price of $25 each. Actual sales met a budget of $500,000 at $25 per carton.

Management has received cost information based on actual performance and needs to understand the drivers of the overall variance from the budget. They have asked you, as an analyst in their management accounting department, to calculate and explain the variances. The following data has been provided:

Budget

Cost of fruit @ 10 pounds per carton$200,000

Cost of packaging @ 1 pound per carton$10,000

Labor costs @ .5 hourse per carton$90,000

Total Cost$300,000

Actual

Cost of fruit @ 10 pounds per carton$244,200

Cost of packaging @ .55 pound per carton$11,000

Labor costs @ .75 hourse per carton$150,000

Total Cost$405,200

Unfavorable variance$105,200.00

Specifically, management needs to know the:

• Standard cost per unit (carton)
• Actual cost per unit
• Direct materials price variances
• Direct materials usage variances
• Direct labor rate variance
• Direct labor efficiency variance

In addition, they would like to understand how the variances are calculated and what caused them. They would also like a recommendation on what might be done to improve the variances.

Compute all required amounts and explain how the computations were performed. Describe whom you would work with to determine the causes of the variances and hypothesize on what caused the variances. Based on your analysis, recommend actions that management could take to improve the variances.