Question
Suppose you manage the local Scoopy's ice cream parlor. In addition to selling ice cream cones, you make large batches of a few flavors of
Suppose you manage the local Scoopy's ice cream parlor. In addition to selling ice cream cones, you make large batches of a few flavors of milk shakes to sell throughout the day. Your parlor is chosen to test the company's "MadeforYou" system. This new system enables patrons to customize their milk shakes by choosing different flavors. Customers like the new system and your staff appears to be adapting, but you
wonder whether this new madetoorder system is as efficient as the old system in which you just made a few large batches. Efficiency is a special concern because your performance is evaluated in part on the restaurant's efficient use of materi als and labor. Your superiors consider efficiency variances greater than 5% to be unacceptable. You decide to look at your sales for a typical day. You find that the parlor used
390 pounds of ice cream and 72 hours of direct labor to produce and sell 2,000 shakes. The standard quantity allowed for a shake is 0.2 pound of ice cream and 0.03 hour of direct labor. The standard costs are $1.50 per pound for ice cream and $8 per hour for labor.
Requirements
1. Compute the efficiency variances for direct labor and direct materials.
2. Provide likely explanations for the variances. Do you have reason to be concerned about your performance evaluation? Explain.
3. memo to Scoopy's national office explaining your concern and suggest ing a remedy.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started