Reference no: EM132418627

Problem:

The price of eggs in the U.S. is expected to rise more than 35 percent in 2018. With millions of eggs being pulled from the shelves US exports of eggs rose 663 percent between 2016 and 2017. In the United States, 2017 saw a 20-year record in egg consumption at 275.2 eggs per person per year, multiply that by 325 million Americans.

The All Butter Pound Cake found in the freezer section of your local grocery store. The first ingredient listed on the package is eggs. The pound cake sells for around $3.97 at the grocery store. However, with the price of eggs on the rise, it is likely that $3.97 price may change.

Required:

1. Which of the variances will be affected by the increase in egg prices and why?
2. Will the increase in egg prices result in favorable or unfavorable variances, and why?
3. What is this company likely to do to its standards based on this increase in price and which standards will be impacted?
4. What, if anything, can they do to mitigate the impact of the rising cost of eggs on its manufacturing costs?