You own Papa Joe's Pizza, and want to investigate your pepperoni (direct material) costs

(pepperoni is used exclusively for pepperoni pizzas).

Last week you had $290 of pepperoni costs (100 pounds of pepperoni at $2.90 per pound)

The standard price of a pound of pepperoni is $3.60.

The standard pepperoni pizza (recipe) calls for 4 ounces of pepperoni per pizza

Last week you produced 500 pepperoni pizzas.

(there are 16 ounces in a pound!)

Calculate the pepperoni price and quantity variance for this week's output

of 500 pepperoni pizzas (including whether these variances are favorable or unfavorable)

you calculate the

price and quantity

variances!

AQ x AP AQ x SP SQ x SP

100 x $2.90 100 x $3.60 125 x $3.60

favorable or unfavorable variance

favorable or unfavorable variance