Compute the price and efficiency variances

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Reference no: EM131294241

Peterson Foods manufactures pumpkin scones. For January 2014, it budgeted to purchase and use 15,000 pounds of pumpkin at $0.89 a pound. Actual purchases and usage for January 2014 were 16,000 pounds at $0.82 a pound. Peterson budgeted for 60,000 pumpkin scones. Actual outpt was 60,800 pumpkin scones.

(SHOW ALL YOUR WORK FOR THE FOLLOWING)

1) Compute the flexible-budget variance.

2) Compute the price and efficiency variances.

3) Comment on the results for requirements 1 and 2 and provide a possible explanation for them.

Reference no: EM131294241

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