Practice help

The food and beverage manager of the Glitz Hotel just got a great deal on beverages for the bar. Instead of buying large 5L containers for $25 each (the equivalent of $2.50 per 500ml), he was instead able to purchase 12,000 cans (1,000 cases of 12-packs) of 500ml cans for $26,640. Beverages are served in 500ml servings. Usually, Glitz sells 800 beverages over a weekend, but they actually went through 900 cans this past weekend. However, out of the 900 cans served to customers, 50 customers had to be refunded due to problems with the quality of the beverage - this meant the actual number of sales was only 850 beverages. Direct labour costs are driven by the number of beverages served. A typical weekend requires four servers each working two 8-hour shifts for a total of 64 hours. Servers are usually paid $12/hour. At the end of the weekend, actual labour costs were $898 for 75 hours. Required: A Calculate the following variances: Material rate Material quantity Direct Labour rate Direct labour efficiency B Briefly explain the variances to the hotel manager, assuming that the variances are inter- related. Assess the special purchase and identify other factors that should be considered (ie. The assessment should be both quantitative and qualitative)