Baird Fruit Basket Company makes baskets of assorted fruit. The standard and act

Question

Baird Fruit Basket Company makes baskets of assorted fruit. The standard and actual costs of oranges used in each basket of fruit follow.

Baird actually produced 25,200 baskets.

Required

Determine the materials price variance and indicate whether it is favorable (F) or unfavorable (U).

Determine the materials usage variance and indicate whether it is favorable (F) or unfavorable (U).

Standard Actual Average number of oranges per basket 5.10 6.80 Price per orange × $ 0.30 × $ 0.25 Cost of oranges per basket $ 1.53 $ 1.70

Explanation / Answer

Material price variane = (Standard price-actual price)actual quantity

                                    = (0.30-0.25)*171360

Material price variance = 8568 F

Material usage variance = (Standard quantity-actual quantity)Standard price

                                        = (25200*5.10-25200*6.80)*0.30

Material usage variance = 12852 U

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