Aunt Mollys Old Fashioned Cookies bakes cookies for a chain of retail stores. The companys best-selling cookie is Chocolate Nut
Aunt Molly€™s Old Fashioned Cookies bakes cookies for a chain of retail stores. The company€™s best-selling cookie is Chocolate Nut Supreme, which is marketed as a gourmet cookie and regularly sells for $9.60 per kilogram. The standard input cost per kilogram of Chocolate Nut Supreme, based on Aunt Molly€™s normal monthly production of 400,000 kilograms, is calculated as follows:
Aunt Molly€™s management accountant, Karen Blair, prepares monthly budget reports based on these standard costs. Presented here is April€™s report, which compares budgeted and actual performance.
1. Compute the following variances:
a. Selling-price variance.
b. Material-price variance.
c. Material-efficiency variance.
d. Labour-price variance.
e. Labour-efficiency variance.
2. What explanations might exist for the variances in requirement 1?
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