Reed Cake Company makes and sells cakes to retail stores. One of the company's most popular cakes is carrot cake, which sells for $8.00 per pound. The standard cost per pound of carrot cake is presented below. The following cost information is based on the company's normal monthly production of 400,000 pounds. "Direct-labor rates include employee benefits. tApplied on the basis of direct-labor hours. By using these standard costs, Isabel Faia, management accountant of the company, prepares monthly budget reports for November. The variance report is presented below. Variance Report for November Mia Murray, president of the company, is not satisfied with the results because the product's contribution margin decreased. Murray has asked Faia to investigate this decrease and Faia has prepared the following report for the analysis. Report for November Required: Compute the following variances. Indicate whether a variance is favorable or unfavorable. 1. Direct-material price variance ( 1 point) 2. Direct-material quantity variance (1 point) 3. Direct-labor efficiency variance (1 point) 4. Variable-overhead spending variance (1 point) 5. Variable-overhead efficiency variance (1 point) Reed Cake Company makes and sells cakes to retail stores. One of the company's most popular cakes is carrot cake, which sells for $8.00 per pound. The standard cost per pound of carrot cake is presented below. The following cost information is based on the company's normal monthly production of 400,000 pounds. "Direct-labor rates include employee benefits. tApplied on the basis of direct-labor hours. By using these standard costs, Isabel Faia, management accountant of the company, prepares monthly budget reports for November. The variance report is presented below. Variance Report for November Mia Murray, president of the company, is not satisfied with the results because the product's contribution margin decreased. Murray has asked Faia to investigate this decrease and Faia has prepared the following report for the analysis. Report for November Required: Compute the following variances. Indicate whether a variance is favorable or unfavorable. 1. Direct-material price variance ( 1 point) 2. Direct-material quantity variance (1 point) 3. Direct-labor efficiency variance (1 point) 4. Variable-overhead spending variance (1 point) 5. Variable-overhead efficiency variance (1 point)
