(Appendix) Polermo Inc. produces three topping, 18 inch frozen pizzas and uses a standard cost system. The three pizza toppings (in addition to cheese) are onions, olives, and mushrooms. To some extent, discretion may be used to determine the actual mix of these toppings. The company has two classes of labor, and discretion also may be used to determine the mix of the labor inputs. The standard cost card for a pizza follows:
|
Onions |
3 ounces at $0.10 per ounce |
|
Olives |
3 ounces at $0.35 per ounce |
|
Mushrooms |
3 ounces at $0.50 per ounce |
|
Labor category 1 |
5 minutes at $12 per hour |
|
Labor category 2 |
6 minutes at $8 per hour |
During May 2010, the company produced 48,000 pizzas and used the following inputs:
|
Onions |
8,000 pounds |
|
Olives |
12,000 pounds |
|
Mushrooms |
8,000 pounds |
|
Labor category 1 |
5,200 hours |
|
Labor category 2 |
4,000 hours |
During the month there were no deviations from standards on material prices or labor rates.
a. Determine the material quantity, mix, and yield variances.
b. Determine the labor efficiency, mix, and yield variances.
c. Prepare the journal entries to record the above mix and yield variances.