Only need the answer to number 4Wildcat Pizza, Inc. produces batches of frozen pizzas to sell at a variety of grocery stores throughout the country. Standard cost information for each batch is presented as follows:Direct materials$60.00Direct labor40.00Variable overhead30.00Total$130.00Wildcat produced and sold 100,000 batches for the year and encountered the following production variances:Direct materials price variance(300,000)FavorableDirect materials quantity variance290,000UnfavorableDirect labor rate variance(170,000)FavorableDirect labor efficiency variance(140,000)FavorableVariable overhead spending variance150,000UnfavorableVariable overhead efficiency variance(210,000)FavorableTotal variable production cost variance(380,000)FavorableCompany policy is to investigate all unfavorable variances above 5 percent of the flexible budget amount for direct materials, direct labor, and variable overhead.Identify the variances that should be investigated according to company policy. Show calculations to support your answer.What recommendations would you make for the company’s current policy?Identify the highest favorable variance and highest unfavorable variance and provide one possible cause of each variance.Sarah Longmeadow, the owner of Wildcat Pizza, reviewed the company’s variance analysis report. The materials price variance of $(300,000) was the most significant favorable variance for the month, and the materials quantity variance of $290,000 was the most significant unfavorable variance. Sarah would like to reward the company’s purchasing agent for achieving such substantial savings by giving her a $2,000 bonus while not providing any bonus for the production manager.Do you agree with Sarah’s approach to awarding bonuses? Explain.What circumstances might lead to the conclusion that the purchasing agent should not receive a bonus?

The total cost of production of a good comprises of the total fixed cost of production and the total…

Answered: Only need the answer to number 4

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Only need the answer to number 4

Wildcat Pizza, Inc. produces batches of frozen pizzas to sell at a variety of grocery stores throughout the country. Standard cost information for each batch is presented as follows:

Direct materials	$60.00
Direct labor	40.00
Variable overhead	30.00
Total	$130.00

Wildcat produced and sold 100,000 batches for the year and encountered the following production variances:

Direct materials price variance	(300,000)	Favorable
Direct materials quantity variance	290,000	Unfavorable
Direct labor rate variance	(170,000)	Favorable
Direct labor efficiency variance	(140,000)	Favorable
Variable overhead spending variance	150,000	Unfavorable
Variable overhead efficiency variance	(210,000)	Favorable
Total variable production cost variance	(380,000)	Favorable

Company policy is to investigate all unfavorable variances above 5 percent of the flexible budget amount for direct materials, direct labor, and variable overhead.

Identify the variances that should be investigated according to company policy. Show calculations to support your answer.
What recommendations would you make for the company’s current policy?
Identify the highest favorable variance and highest unfavorable variance and provide one possible cause of each variance.
Sarah Longmeadow, the owner of Wildcat Pizza, reviewed the company’s variance analysis report. The materials price variance of $(300,000) was the most significant favorable variance for the month, and the materials quantity variance of $290,000 was the most significant unfavorable variance. Sarah would like to reward the company’s purchasing agent for achieving such substantial savings by giving her a $2,000 bonus while not providing any bonus for the production manager.

Do you agree with Sarah’s approach to awarding bonuses? Explain.
What circumstances might lead to the conclusion that the purchasing agent should not receive a bonus?

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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