Case 3: UP NY Diner

Janice Young is the kitchen manager for UP NY Diner, maker of Jeds Grouper Pasties. UP NY Diner got its start when Jed Baker, a snowbird from upper NY, tried grilled grouper during a winter stayover in South Florida. He was so impressed that he bought a pound of the fish at a farmers market, froze it, and took it back to upper NY to share with his friends. He didnt have quite enough to make it a meal, so he served it in a pastie (pronounced Pass-T)a Northern New York traditional dish. Over time it became his tradition to serve grouper pasties each spring when he returned from the South. Eventually, he built a kiosk out of a shed mounted on a trailer and started having his grandkids sell Jeds Grouper Pasties at fairs and other summer events to help them pay for college. Within a few years the business had expanded enough to open a central kitchen to prepare pasties. But this summer his grandkids decide to put their college accounting to work and suggest that he try using variance analysis. . The June budget, based on standard costs:

Budgeted Production	2,600 pasties
Direct materials	Dough$286 (0.25 Lbs. @ $0.44/Lb. x 2,600) Filling/spices$936 (0.75 Lbs. @ $0.48/Lb. x 2,600) Grouper fish--$5,200 (1/16 Lb. @ $32.00/Lb. x 2,600)
Direct Labor	$2,340 (0.05 DLH@ $18.00/Hr. x 2,600)
VOH	$1,950 (VOH allocated at $15.00 per DLH x 130 DLH)

At the end of the month, Jeds accountant sends him the following financial results (along with a bill for services):

Actual June performance of the central pastie kitchen:

Actual Production	2,500 pasties
Direct materials	Dough$315.00 (0.30 Lbs. @ $0.42/Lb. x 2,500) Filling/spices$1,050.00 (0.70 Lbs. @ $0.60/Lb. x 2,500) Grouper fish--$5,460.00 (.91 oz. @ $2.40/oz. x 2,500)
Direct Labor	$2,337.50 (0.055 DLH@ $17.00/Hr. x 2,500)
VOH	$1,893.00

Jed and his grandkids sit down and compare the actual numbers to the budget, and this is what they see:

UP NY Diner
Kitchen Performance Report
For the Month of June
	Actual	Budget	Variance
Direct Materials	Dough--$315.00 Filling/spices-- $1,050.00 Grouper fish--$5,460.00	Dough--$286.00 Filling/spices-- $936.00 Grouper fish--$5,200.00	$ 29.00 U $ 114.00 U $ 260.00 U
Direct labor	$2,337.50	$2,340.00	$ 2.50 F
Variable OH	$1,893.00	$1,950.00	$ 57.00 F
Total	$11,055.50	$10,712.00	$ 343.50 U