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 16 giant-size sausage pizzas. Direct Material Mix Mix Proportion SP Standard Cost Tomato sauce 13 lbs 0.325 $1.40 $18.20 Cheese 15 0.375 2.80 42.00 Sausage 12 0.300 2.10 25.20 Total 40 lbs $85.40
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.
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 16 giant-size sausage pizzas.
| Direct Material | Mix | Mix Proportion | SP | |
| Tomato sauce | 13 lbs | 0.325 | $1.40 | $18.20 |
| Cheese | 15 | 0.375 | 2.80 | 42.00 |
| Sausage | 12 | 0.300 | 2.10 | 25.20 |
| Total | 40 lbs | $85.40 |
Mangia put a batch of 2,000 pounds of direct materials (enough for 800 frozen sausage pizzas) into process. Of the total, 700 pounds were tomato sauce, 840 pounds were cheese, and the remaining 460 pounds were sausage. The actual yield was 780 pizzas.
What if of the total 2,000 pounds of ingredients put into process, 700 pounds were tomato sauce, 700 pounds were cheese, and 600 pounds were sausage? How would that affect the mix variance?
The mix variance will be
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