Aunt Emily's Food Products is famous for its frosted fruit cake. The main ingredient of the cake is dried fruit, which Aunt Emily's purchases by the pound. In addition, the production requires a certain amount of direct labor. Aunt Emily's uses a standard cost system, and at the end of the first quarter, there was a favorable direct materials cost variance. Which of the following is a logical explanation for that variance?

Question

Natalya Bowman

Business

8 September, 04:16

Aunt Emily's Food Products is famous for its frosted fruit cake. The main ingredient of the cake is dried fruit, which Aunt Emily's purchases by the pound. In addition, the production requires a certain amount of direct labor. Aunt Emily's uses a standard cost system, and at the end of the first quarter, there was a favorable direct materials cost variance. Which of the following is a logical explanation for that variance?

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Answers (1)

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Taylor Hanson · Answer 1

Consider the following explanation.

Explanation:

The logical explanation for that variance is "The purchasing manager was able to secure a volume discount on dried fruit, purchasing the fruit for less than the amount set by standard." As a consecuence of a previpous deal with the provider.