Question

You own Margarita Buena, a local establishment that serves beverages (when allowed). You have been concerned about your tequila costs and have the following information:
Tequila is used exclusively in margaritas (not sold separately or as part of any other drink).
Based on the margarita recipe standards, each and every case of tequila is expected to yield (be used in the production of) a total of 144 margaritas. (12 bottles per case, 12 margaritas per bottle) The standard price (what we expect to pay our supplier) of tequila is $240 per case.

The following actual results were recorded for last Saturday:
Margarita Buena sold 360 margaritas.

Exactly 3 full cases of tequila were used at a total cost (for all 3 combined) of $664.

A) What was the tequila total price variance (include "F"avorable" or "U"nfavorable") for Saturday? Show formula

B) What was the tequila total quantity variance (include "F"avorable or "U"nfavorable) for Saturday? Show formula

C) (4 points total, evaluated for appropriateness and completeness)    Based on your answers to the above, what could have caused the (both) variances? (there   were no errors in setting standards) Be specific on which answer is for which variance. And based on each variance cause, what managerial steps should you (the owner) take?

Answer 1