How does the drop in the price of eggs impact Kellogg’s® variances for its Eggo® Homestyle waffles?

In 2015, when the avian flu hit egg producers hard, there was a shortage of eggs. Egg prices increased dramatically. Over the years since 2015 however, egg production has ramped back up as egg producers have restocked their flocks of egg-laying chickens.  There is now a glut of eggs, putting causing the price of eggs to greatly decrease.

Eggs are used in many products, including ice cream, cream pies, eggrolls, marshmallows, lollipops, meatloaf, and pasta. Kellogg’s® Eggo® waffles are among products that use eggs.

Fun fact: The average American eats 250 eggs per year, according to Business Insider (“10 things you never knew about eggs,” 3/3/2017.)

Questions

1. Which of the Eggo® waffle variances would be impacted by the drop in the price of eggs?
2. Would the drop in the price of eggs cause a favorable or unfavorable variance for Kellogg’s?
3. What is Kellogg’s likely to do to its standard(s) based on the current price of eggs? Which standard(s) would be impacted?

Instructor Resources

These resources are provided to give the instructor flexibility for use of Accounting in the Headlines articles in the classroom. The blog posting itself can be assigned via a link to this site OR by distributing the student handout below. Alternatively, the PowerPoint file below contains a bullet point overview of the article and the discussion questions.

• Student handout (pdf) (word) (contains entire blog posting + discussion questions)
• PowerPoint file (brief article overview + discussion questions)

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