Question
In: Accounting
Southside Pizzeria wants to improve its ability to manage the ingredient costs associated with making and...
Southside Pizzeria wants to improve its ability to manage the ingredient costs associated with making and selling its pizzas. For the month of June, the company plans to make 1,000 pizzas. It has created a planning budget that includes a cost formula for mozzarella cheese of $7.20 per pizza. At the end of June, Southside actually sold 1,100 pizzas and the actual cost of the cheese that it used during the month was $3,102.
Required:
Assume that the company establishes a price standard of $0.90 per ounce for mozzarella cheese and a quantity standard of eight ounces of cheese per pizza. Also, assume that Southside actually used 9,400 ounces of cheese during the month to make 1,100 pizzas.
a. What is the materials price variance for mozzarella cheese for June?
b. What is the materials quantity variance for mozzarella cheese for June?
c. What is the materials spending variance for mozzarella cheese for June?
Solutions
Expert Solution
a. What is the materials price variance for mozzarella cheese for June?
Answer: $5,358
b. What is the materials quantity variance for mozzarella cheese for June?
Answer: -$540
c. What is the materials spending variance for mozzarella cheese for June?
Answer: $4,818
| Particulars | Amount | ||
| Actual quantity | 9,400 | ounce | (a) |
| Standard price | 0.90 | per ounce | (b) |
| Actual quantity * Standard price | $8,460 | (c=b*a) | |
| Actual cost | $3,102 | (d) | |
| Price variance | $5,358 | (e=c-d) | |
| Standard quantity | 8,800 | ounce | (f=8 ounce*1100 pizza) |
| Standard quantity * Standard price | 7,920 | (g=f*b) | |
| Quantity variance | -$540 | (h=g-c) | |
| Spending variance | $4,818 | (g-d) |
ekkarill92 answered 1 year agoRelated Solutions
Southside Pizzeria wants to improve its ability to manage the ingredient costs associated with making and...
Southside Pizzeria wants to improve its ability to manage the
ingredient costs associated with making and selling its pizzas. For
the month of June, the company plans to make 1,000 pizzas. It has
created a planning budget that includes a cost formula for
mozzarella cheese of $2.40 per pizza. At the end of June, Southside
actually sold 1,100 pizzas and the actual cost of the cheese that
it used during the month was $2,632.
Required:
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