The Bergie Restaurant Group manufactures the bags of frozen French fries used at its franchised restaurants. Last week, Bergie's purchased and used 95,000 pounds of potatoes at a price of $0.75 per pound. During the week, 2,200 direct labor hours were incurred in the plant at a rate of $12.40 per hour. The standard price per pound of potatoes is $0.85, and the standard direct labor rate is $12.15 per hour. Standards indicate that for the number of bags of frozen fries produced, the factory should have used 92,000 pounds of potatoes and 2,000 hours of direct labor. Read the requirements.
The Bergie Restaurant Group manufactures the bags of frozen French fries used at its franchised restaurants. Last week, Bergie's purchased and used 95,000 pounds of potatoes at a price of $0.75 per pound. During the week, 2,200 direct labor hours were incurred in the plant at a rate of $12.40 per hour. The standard price per pound of potatoes is $0.85, and the standard direct labor rate is $12.15 per hour. Standards indicate that for the number of bags of frozen fries produced, the factory should have used 92,000 pounds of potatoes and 2,000 hours of direct labor. Read the requirements.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The Bergie Restaurant Group manufactures the bags of frozen French fries used at its franchised restaurants. Last week, Bergie's purchased and used 95,000 pounds of potatoes at a price of $0.75
per pound. During the week, 2,200 direct labor hours were incurred in the plant at a rate of $12.40 per hour. The standard price per pound of potatoes is $0.85, and the standard direct labor rate is
$12.15 per hour. Standards indicate that for the number of bags of frozen fries produced, the factory should have used 92,000 pounds of potatoes and 2,000 hours of direct labor.
Read the requirements.
Requirement 1. Determine the direct material price and quantity variances. Be sure to label each variance as favorable or unfavorable. (Enter the variances as positive numbers. Enter currency
amounts to the nearest cent and your answers to the nearest whole dollar. Label the variances as favorable (F) or unfavorable (U). Abbreviations used: DM = Direct materials.)
Begin by determining the formula for the price variance, then compute the price variance for direct materials.
× (
X
Requirements
1. Determine the direct material price and quantity variances. Be sure to label
each variance as favorable or unfavorable.
2. Think of a plausible explanation for the variances found in Requirement 1.
3. Determine the direct labor rate and efficiency variances. Be sure to label each
variance as favorable or unfavorable.
4. Could the explanation for the labor variances be tied to the material variances?
Explain.
Print
Done
)
=
=
X
DM price variance
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