Case Study: Papaya Partners is a distributor of papayas. They purchase papayas from individual growers and package them in 10-pound cartons for...
This question has been answered
Question

Case Study:

Papaya Partners is a distributor of papayas. They purchase papayas from individual growers and package them in 10-pound cartons for delivery to their various customers, generally supermarkets. Last month, they budgeted to sell $500,000 worth of cartons at a price of $25 each. Actual sales met a budget of $500,000 at $25 per carton.

Management has received cost information based on actual performance and needs to understand the drivers of the overall variance from the budget. They have asked you, as an analyst in their management accounting department, to calculate and explain the variances. The following data has been provided:


Budget

Cost of fruit @ 10 pounds per carton   $   200,000

Cost of packaging @ 1 pound per carton   $    10,000

Labor costs @ .5 hours per carton   $    90,000

Total Cost   $   300,000

   

Actual

Cost of fruit @ 10 pounds per carton.   $   244,200

Cost of packaging @ .55 pound per carton   $    11,000

Labor costs @ .75 hours per carton   $   150,000

Total Cost   $   405,200

   

Unfavorable variance   $105,200.00


Specifically, management needs to know the:

• Standard cost per unit (carton)

• Actual cost per unit.

• Direct materials price variances. 

• Direct materials usage variances

• Direct labor rate variance

• Direct labor efficiency variance

In addition, they would like to understand how the variances are calculated and what caused them. They would also like a recommendation on what might be done to improve the variances.

For this assignment, compute all required amounts and explain how the computations were performed. Describe whom you would work with to determine the causes of the variances and hypothesize on what caused the variances. Based on your analysis, recommend actions that management could take to improve the variances.

Answered by Expert Tutors
Step-by-step explanation
7 Attachments
22f96667-e44e-4612-a2f7-78c79f858d02.jpg
jpg
3538cea5-d728-4a4c-8b49-73affc1a6da1.jpg
jpg
464573bc-a681-4ea3-bab1-7b3891acbb3d.jpg
jpg
5180ae39-d50f-4427-af3c-74c8e40b8882.jpg
jpg
832df322-ee57-44ec-8fad-d48c4fc7dc49.jpg
jpg
c85357e6-ff13-430f-8c8f-8d3e1f34818d.jpg
jpg
d9355b63-1e3c-42cf-ac5c-0c87cad15657.jpg
jpg
The student who asked this found it Helpful
Overall rating 100%
Get unstuck

416,475 students got unstuck by Course
Hero in the last week

step by step solutions

Our Expert Tutors provide step by step solutions to help you excel in your courses