Reference no: EM132848974

Question - The Soup Girl Limited produces gourmet Vegetable Soup in a small processing plant. Carrots are one of six different vegetables that she uses in her recipe. For one can of soup the recipe calls for 2 standard sized carrots. Soup Girl has set the standard cost at $.20 per carrot. After analyzing her Direct Labour standards she expects that one worker is able to produce 1 can of soup every 5 minutes. Workers are paid $15.00 per hour.

Last month the plant actually produced 10,000 cans of soup. 21,000 carrots were purchased for a total of $3,780, and 20,040 carrots were actually used in production. The workers preparing the soup actually worked 800 hours and they earned $12,160.

Required -

i) Calculate the Direct Material Price and Quantity Variances?

ii) Calculate the Direct Labour Rate and Efficiency Variances?

iii) Suggest a reasonable business reason that may explain what caused each Unfavourable variance you found.

iv) Would it be possible for the company to utilize the Direct Materials Mix Variance? Explain why or why not.