Dee\'s cookies sell chocolate chip cookies on campus. of course, chocolate chips

Question

Dee's cookies sell chocolate chip cookies on campus. of course, chocolate chips are the most important ingredient for taste and cost. The standard usage of chips is 11 chips per cookie. The standard price for a bag of chocolate chips is $2.05. Dee has found that students like more than the standard amlunt of chocolate chips in the cookies. She therefore started to make her cookies with 15 chips. The store she buys the chocolate chops from has a sale on the chips, selling them for $1.89 per bag. There are 400 chips in a bag. Calculate the price variance, usage variance, and total variance.

Explanation / Answer

Price Variance = Standard price - Sale price = 2.05 - 1.89 = 0.16 per bag = 0.16/400 = $ 0.0004 per chip (favorable)

Usage variance = Dee's usage - Standard usage = 15 - 11 = 4 chips per cookie (unfavorable)

Total variance = (1.89/400)*15 - (2.05/400)*11 = $ 0.0145 per cookie (unfavorable)

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