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To produce ketchup of a specified consistency (color and taste) BARBER Corporation mixes two types of tomatoes grown in different regions: California tomatoes (ALPHAs) and
To produce ketchup of a specified consistency (color and taste) BARBER Corporation mixes two types of tomatoes grown in different regions: California tomatoes (ALPHAs) and Florida tomatoes (BETAs). BARBER'S production standards require 1.6 tons of tomatoes to produce 1 ton of ketchup; 60% of the tomatoes are budgeted to be ALPHAs and 40% BETAs. The direct material inputs are budgeted to cost $80 per ton of ALPHA and $90 per ton of BETA. Actual results for 2014 show that of 5, 200 tons of tomatoes were purchased and used to produce 4,000 tons of ketchup: 3, 200 tons of ALPHAs at actual cost of $82 per ton 2,000 tons of BETAs at actual cost of $96 per ton Compute the direct materials price and efficiency variance. Explain what these results show. Split the efficiency variance into a mix variance and a yield variance. Explain how these two computations shed some light on what has happened at the BARBER Corporation
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