Pietro\'s Pizza has established the following standards for making one pizza: Do
ID: 2419104 • Letter: P
Question
Pietro's Pizza has established the following standards for making one pizza:
Dough: 0.6 pounds at $2 per pound
Labor: 0.15 hours at $10 per hour
Actual sales volume for the past month was 13,000 units. Actual dough and labor quantities and prices were as follows:
Dough: 5,850 pounds (total) at $1.25 per pound
Labor: 2,600 hours (total) at $15 per hour
Required:
(enter favorable and unfavorable variances as positive and negative numbers, without F or U)
(a) What are the input price and quantity variances for dough?
materials price variance = $ (enter negative numbers with a minus, i.e., negative $100 is -100, not ($100))
materials quantity variance = $ (enter negative numbers with a minus)
(b) What are the input price and quantity variances for labor?
labor rate variance = $ (enter negative numbers with a minus)
labor efficiency variance = $ (enter negative numbers with a minus)
Explanation / Answer
1.
Material quantity variance=(SQ-AQ)*SP=(7,800-5,850)*2=$3,900
Material price variance =(SP-AP)*AQ=(2-1.25)*5,850=$4,388
Material cost variance=SQ*SP-AQ*AP=$3,900+$4,388=$8,288
1.
Labour quantity variance=(SH-AH)*SR=(1,950-2,600)*10=-$6,500
Labour price variance =(SR-AR)*AH=(10-15)*2,600=-$13,000
Labour cost variance=SH*SR-AH*AR=-$6,500-$13,000=-$19,500