Hanson Retailers planned to make 280,000 cans of pasta sauce and spend $140,000 on tomatoes during November. However, demand was weak due to increased competition, and only 260,000 cans of pasta sauce were produced. The actual cost incurred was $132,000. Tomato prices were as expected during the period. Which of the following statements would be a fair statement regarding Hanson's performance on tomato usage?

Question

Quizplus · Accepted Answer

Hanson planned to spend $140,000 on tomatoes to produce 280,000 cans of pasta sauce. However, they only produced 260,000 cans, which means they should have spent $130,000 (260,000/280,000 x $140,000) on tomatoes. But the actual cost incurred was $132,000, which means they went over budget by $2,000.

Hanson Retailers Planned to Make 280,000 Cans of Pasta Sauce