1.EM, Inc. private labels mini-cupcakes for Starbucks. For April 2012, it budgeted to purchase and use 18,000 pounds of flour at $0.39 a pound. Actual purchases and usage for April 2012 were 22,000 pounds at $0.42 a pound. EM budgeted to produce 120,000 mini-cupcakes. EM budgets to obtain 4 mini-cupcakes per pound of flour. Actual output was 132,000 mini cupcakes.
a. Compute the flexible-budget variance.
b. Compute the price variance.
c. Compute the efficiency variances.
d. Comment on the results for the requirements above and provide a possible explanation for them.