Question
what's the price and volume variances for sales, assuming that Big Al's sold all pizzas produced for $137,565 (meat) and $9,051 (veggie). What might explain
what's the price and volume variances for sales, assuming that Big Al's sold all pizzas produced for $137,565 (meat) and $9,051 (veggie). What might explain these variances?
B. what's the price and quantity variances for direct materials for each type of pizza, assuming that Big Al's paid $29,093 for 32,325 units of raw material for meat pizzas and $1,453 for 2,401 units of raw material for veggie pizzas.(A unit consists of dough shell, sauce, cheese, meat or veggies, and assembly materials.) In addition, 30,995 units were used to produce meat pizzas, and 2,149 units were used to produce veggie pizzas. How would these variances be interpreted? What might explain these variances? Would you consider them to be large enough to be important?
C. what's the labor rate and efficiency variances, assuming that Big Al's paid $71,350 in labor costs for 7,150 hours of labor for meat pizzas and $6,425 in labor costs for 650 hours of labor for veggie pizzas. How would these variances be interpreted? What might explain them? Would you consider them large enough to be important?
D. Using the predetermined overhead rate from Part 3 (with direct labor hours as the cost driver), compute the variable overhead rate and efficiency variances. Assume that Big Al's paid $20,852 in total overhead costs, consisting of $17,002 of variable overhead and $3,850 of fixed overhead. How would these variances be interpreted? What might explain these variances? Would you consider them large enough to be important?
E. How might Big Al's extend its variance analysis to be compatible with its use of activity-based costing as discussed in Part 3?
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