Assignment Cost Variance Analysis_KristinRice

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Eastern Gateway Community College *

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213

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Economics

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Feb 20, 2024

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docx

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Uploaded by MajorTeam2621

Kristin Rice 1 Assignment: Cost Variance Analysis 1. Which of Sara Lee’s variances will be affected by the increase in egg prices? Why? The material costs would be the variance that would be affected by the increase in egg prices. Eggs are the first ingredient in her all butter pound cake, which means that the cost of the goods to make the all butter pound cake with increase. 2. Will the increase in egg prices result in favorable or unfavorable variances for Sara Lee? Why? The increase in egg prices will result in unfavorable variances for Sara Lee. They will have to spend more money making her all butter pound cakes. 3. What is Sara Lee® likely to do to its standards-based on this increase in price and which standards will be impacted? They are likely going to increase their standards for material costs. 4. What, if anything, can Sara Lee® do to mitigate the impact of the rising cost of eggs on its manufacturing costs? Sara Lee is going to have to find eggs at a cheaper price somewhere else or find some of the other ingredients at a lower price to help make up the difference for the increase in the eggs. They could also raise the price of the product to offset the increase of egg prices.

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