The process of Cornnut snacks begins with a specialized patented strain of corn. The corn kernels are removed from the ear and conveyed into a pressurized vat of hot oil causing them to expand to 6 times their size. They are seasoned and packaged depending on customer and market demands. The company has 3 sales representatives who are 100% commissioned for open market sales. Most of the business 80% is contracted with Prisons, schools, and box stores (Costco). There is a Division President, and Marketing VP (position vacant), a Production VP, and a Controller. Other fixed costs are equipment and building. None of the overhead is product-specific.

Due to the recent floods in Tulare County, the crops were substantially impacted. Only about 80% of the expected crop was recovered. There are no substitute crops.

How does this impact material variance to budget?

1. Favorable Price variance
2. Unfavorable Price variance
3. Favorable volume variance
4. Unfavorable volume variance

What steps can management take to minimize the impact of this on the divisions profit variance to budget? The company uses Standard absorption for overhead allocation. Will fixed overhead be overapplied, underapplied, or insufficient data to determine? What can management do for the Sales representatives who will not have an opportunity to sell products in the coming year due to the lack of products?