Question - Joe Java is a chain of 55 coffee shops. The standard amount of ground coffee per cup is 0.80 ounces. During the month of September, the company sold 350,000 cups of coffee and the 55 shops reported using 18,600 pounds of coffee. Also during September, the company purchased 19,000 pounds of coffee at a cost of $290,700. The standard price per pound is $15. Joe Java views variances greater than 0.8% to be material in amount.
A. Compute material price and quantity variances.
B. Do either or both of the variances warrant investigation? Explain why or why not.