Companies frequently describe the terms of all long-term liability agreements in notes to the financial statements.

While the prices that consumers pay are often inflexible, a significant number of final prices paid in business-to-business transactions are negotiated

Indicate whether the statement is true or false

Price and efficiency variances

Peterson Foods manufactures pumpkin scones. For January 2014, it budgeted to purchase and use 15,000 pounds of pumpkin at $0.89 a pound. Actual purchases and usage for January 2014 were 16,000 pounds at $0.82 a pound. Peterson budgeted for 60,000 pumpkin scones. Actual output was 60,800 pumpkin scones. Required: 1. Compute the flexible-budget variance. 2. Compute the price and efficiency variances. 3. Comment on the results for requirements 1 and 2 and provide a possible explanation for them.