Question

Standard costing and Variance analysis

1) identify the most appropriate variances Just Eat company
should focus on and why they should focus on it
(talk about it)
(300 words)

Answer 1

Just Eat company should focus on materials price variance, labor rate variance, and sales volume variance to analyze purchasing practices, labor costs, and sales performance respectively.

Step-by-step explanation:

The most appropriate variances that Just Eat company should focus on are materials price variance, labor rate variance, and sales volume variance.

• Materials price variance: This variance measures the difference between the actual price paid for materials and the standard price expected. Just Eat should focus on this variance to analyze the effectiveness of their purchasing practices and negotiate better deals with suppliers to reduce costs.
• Labor rate variance: This variance compares the actual wage rate paid to the standard wage rate expected. Just Eat can focus on this variance to identify if there are any problems with their labor costs, such as excessive overtime or higher wages than budgeted.
• Sales volume variance: This variance compares the actual sales volume achieved to the budgeted sales volume. Just Eat should focus on this variance to understand the factors influencing their sales performance and to make necessary adjustments in marketing strategies.