Variance Analysis Spring 2019.pdf - Variance...

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Variance Analysis (ACCT6100) Objectives: To improve skills in quantitative literacy by computing four direct cost variances in Excel To improve skills in communication by preparing and explaining a performance report in a memo Jolly’s Cookies bakes cookies for retail stores. The company’s best-selling cookie is Chocolate Nut, a gourmet cookie that sells for $8.00 per pound. The standard monthly production level is 400,000 pounds, and the standard inputs and costs per pound are: Quantity per Pound of cookies Standard Unit Costs Direct Materials Cookie Mix 10 oz. $0.02 per ounce Milk Chocolate 5 oz. $0.15 per ounce Almonds 1 oz. $0.50 per ounce Direct Labor Mixing 1/60 Hour $14.40 per hour Baking 2/60 Hour $18.00 per hour Karen Blair, the company’s management accountant, prepares monthly budget reports based on these standard costs. Molly Cates, the company president, is disappointed with the April results shown here: Performance Report Actual Budget Variance Units (pounds) 450,000 400,000 50,000 Revenues $3,600,000 $3,200,000 $355,000 Direct Materials $865,000 $580,000 $285,000 Page 1 of 2 F F U

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