Assume each Starbucks store tracks direct labor and direct material costs for each of its drinks, with the stan- dard costs for a single grande cappuccino as follows:
Labor $0.40
Coffee 0.70
Dairy products 0.35
Cup and lid 0.07
Stirrers, napkins 0.03
Suppose actual output for one week is 1,000 grande cappuc- cino drinks. The actual total cost of coffee used to make these drinks was $730. The manager of the store has no control over the price paid for the coffee provided by Starbucks- this is a predetermined price. What is the total direct materi- als variance for coffee for this drink? Is this a price or an effi- ciency variance? Is it favorable or unfavorable? Why?
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