Professional Documents
Culture Documents
not for profit organizations. Part of the meeting packages they sell include a buffet lunch. As a way to
try and control costs, the company put together these standard costs for a buffet.
• Direct Labour hours was selected as the cost driver for Variable Manufacturing Overhead.
During the month of June, the total V-MOH was $3,050
• During June, 2,100 buffets were served
1. For the Direct Materials (food costs), compute the price and quantity variances
a. Due to an existing labour shortage at their usual food supplier, the company used a new
supplier for the food in June. This new company is eager to enter into a long-term
purchase contract. Explain if the company should or shouldn’t enter into this new
contract
2. Compute the direct labour rate and efficiency variances
3. Compute the variable overhead spending and efficiency variances
The ownership at Pineridge Golf Course are elated with the results of the June Senior league. Net
income was up 60% more than the budget! They are considering giving the General Manager a
performance bonus for her efforts. Should they? Comment.
Variable Costs