n December (month 24) of year 2 of operations, Big Al’s produced and sold 32,675 pizzas, consisting of 30,570 meat pizzas and 2,105 veggie pizzas. The budgeted sales price for meat pizzas was $5.00, and for veggie pizzas, $5.25. The estimated production and sales during December was 31,678 meat pizzas and 2,595 veggie pizzas.
Required:
A. Compute the price and volume variances for sales, assuming that
Big Al’s sold all pizzas produced for $137,565 (meat) and $9,051
(veggie). What might explain these variances?
B. Compute the price and quantity variances for direct materials
for each type of pizza, assuming that Big Al’s paid $29,093 for
32,325 units of raw material for meat pizzas and $1,453 for 2,401
units of raw material for veggie pizzas.(A unit consists of dough
shell, sauce, cheese, meat or veggies, and assembly materials.) In
addition, 30,995 units were used to produce meat pizzas, and 2,149
units were used to produce veggie pizzas. How would these variances
be interpreted? What might explain these variances? Would you
consider them to be large enough to be important?
C. Compute the labor rate and efficiency variances, assuming that
Big Al’s paid $71,350 in labor costs for 7,150 hours of labor for
meat pizzas and $6,425 in labor costs for 650 hours of labor for
veggie pizzas. How would these variances be interpreted? What might
explain them? Would you consider them large enough to be
important?
A. Material price Variance= (SP-AP)*AQ
Veggie Pizza= (5.25-3.49)*2595 =4567.2 Favorable
Meat Pizza= (5-4.34)31678 =20907.48 Favorable
Volume Variance= (AQ-SQ)*SP
Veggie Pizza= (2595-2105)*5.25 =2572.5 Favorable
Meat Pizza= (31678-30570)5.0 =5540 Favorable
B.
n December (month 24) of year 2 of operations, Big Al’s produced and sold 32,675 pizzas,...
Part Nine in December (month 24) of year 2 of operations, Big Al’s produced and sold 32,675 pizzas, consisting of 30,570 meat pizzas and 2,105 veggie pizzas. The budgeted sales price for meat pizzas was $5.00, and for veggie pizzas, $5.25. The estimated production and sales during December was 31,678 meat pizzas and 2,595 veggie pizzas. Required: A. Compute the price and volume variances for sales, assuming that Big Al’s sold all pizzas produced for $137,565 (meat) and $9,051 (veggie)....
Part Nine in December (month 24) of year 2 of operations, Big Al’s produced and sold 32,675 pizzas, consisting of 30,570 meat pizzas and 2,105 veggie pizzas. The budgeted sales price for meat pizzas was $5.00, and for veggie pizzas, $5.25. The estimated production and sales during December was 31,678 meat pizzas and 2,595 veggie pizzas. Direct Material Cost: Meat = $0.74; Veggie = $0.62... Direct Labor Costs: Meat = $2.51; Veggie = $2.78... Predetermined overhead = estimated cost /...
Part Six in March of year 3, Big Al’s receives a special order from an athletic arena to purchase 5,000 meat pizzas and 3,000 veggie pizzas for a special charity event. Required: A. Assuming that Big Al’s has sufficient excess capacity, what is the minimum price that Big Al’s would be willing to accept for this special order? Assuming that Big Al’s does not have sufficient excess capacity, what minimum price would be acceptable? What qualitative factors should Big Al’s...
Big Al’s Pizza, Inc. needs a cash budget for year 3 and has provided you with the following information. Sales are all on account and are estimated to be collected over a three-month period, with 70 percent collected in the month of sale, 25 percent collected in the next month and 4 percent collected in the third month. The remaining 1 percent is estimated to be uncollectible. December and November sales from the previous year were $201,638 and $185,000 respectively....