Question
Problem #9: Standard Costing & Variances Jakes Cheese Company produces gourmet cheese for resale at local grocery stores. Jakes expected to use 3.0 pounds of
Problem #9: Standard Costing & Variances
Jakes Cheese Company produces gourmet cheese for resale at local grocery stores. Jakes expected to use 3.0 pounds of direct materials to produce one unit (batch) of product at a cost of $8 per pound. Actual results are in for last year, which indicates 45,000 batches of cheese were sold. The company purchased 160,000 pounds of materials at $7.50 per pound, and used 145,000 pounds in production.
Required:
(1) Calculate the materials price variance.
(2) Calculate the materials quantity variance.
(3) Suggest several possible reasons for the materials price and quantity variances calculated in requirements (1) and (2).
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