Mangia Pizza Company makes frozen pizzas that are sold through grocery stores. Mangia developed the following standard mix for spreading on premade pizza shells to produce 19 giant-size sausage pizzas.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Calculating the Yield Variance
Mangia Pizza Company makes frozen pizzas that are sold through grocery stores. Mangia developed the following standard mix for spreading on premade pizza shells to produce 19 giant-size sausage pizzas.
| Direct Material | Mix | Mix Proportion | SP | ||||||||
| Tomato sauce | 10 | lbs. | 0.330 | $1.50 | $15.00 | ||||||
| Cheese | 11 | 0.375 | 2.80 | 30.80 | |||||||
| Sausage | 9 | 0.295 | 2.10 | 18.90 | |||||||
| Total | 30 | lbs. | $64.70 |
Mangia put a batch of 2,000 pounds of direct materials (enough for 1,267 frozen sausage pizzas) into process. Of the total, 620 pounds were tomato sauce, 820 pounds were cheese, and the remaining 560 pounds were sausage. The actual yield was 770 pizzas.
10. Calculate the yield variance. Do not round intermediate calculations, except for number of pizzas which should be rounded to nearest whole number. If required, round your final answer to the nearest cent.
Note: The answer 1,689.8 is wrong :((
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