Problem
PRICE AND EFFICIENCY VARIANCES. Sunshine Foods manufactures pumpkin scones. For Ianuary 2020, it budgeted to purchase and use 14,750 pounds of pumpkin at $0.92 a pound. Actual purchases and usage for January 2020 were 16,000 pounds at $0.85 a pound. Sunshine budgeted for 59,000 pumpkin scones. Actual output was 59,200 pumpkin scones.
Task
a) Compute the ?exible-budget variance.
b) Compute the price and efficiency variances.
c) Comment on the results for requirements 1 and 2 and provide a possible explanation for them.