Answered: Betty's Bakery has the following… | bartleby

FINANCIAL ACCOUNTING

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

**Betty’s Bakery Cost Analysis**

Betty’s Bakery has provided the following standard cost sheet for one unit of its most popular cake:

| Component | SQ | SP |
|----------------|----------|---------------------|
| Direct materials | 1.2 pounds | $1.50 per pound |
| Direct labor | 0.8 hours | $12.00 per hour |

During the month of May, the company produced 960 cakes with the following actual costs:
- Direct materials purchased and used (1,460 pounds): $1,898
- Direct labor (1,020 hours): $11,730

**Required Calculations:**

1. Calculate the direct materials price variance.
2. Calculate the direct materials quantity variance.
3. Calculate the total direct materials variance.
4. Calculate the direct labor rate variance.
5. Calculate the direct labor efficiency variance.
6. Calculate the total direct labor spending variance.

For each requirement, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).

**Variance Analysis Table:**

| # | Description | Variance Amount | Effect |
|---|-----------------------------------------|-----------------|----------|
| 1 | Direct materials price variance | | |
| 2 | Direct materials quantity variance | | |
| 3 | Total direct materials spending variance| | |
| 4 | Direct labor rate variance | | |
| 5 | Direct labor efficiency variance | | |
| 6 | Total direct labor spending variance | | |

This exercise requires calculating cost variances to determine the financial performance of Betty's Bakery and its efficiency in managing production costs.

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