=+11-48 KK Comprehensive variance analysis (CMA) OBJECTIVES 3, 4 Iceland Pty Ltd is a fast-growing ice-cream maker. The company’s new ice-cream flavour, Cherry Star, has a standard selling price of

$8 per litre. The standard monthly production level is 200000 litres, and the standard inputs and costs per litre are:

462 Chapter 11: Flexible budgets, direct cost variances and management control M11_HORN3377_02_LT_C11.indd 462 2/09/13 3:47 PM 1

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10 11 12 13 14 15 A B C D E Cost item Direct materials maerC g01 g/20.0$

extract allinaV g5 g/51.0 yrrehC g1 g/05.0 Direct manufacturing labour a gniraperP .nim1 h/04.41 gnirritS .nim2 h/00.81 Variable overhead b 3 min. 32.40 /h a

Direct manufacturing labour rates include employee benefits.

b Allocated on the basis of direct manufacturing labour-hours.

Quantity per litre of ice-cream Standard unit costs Molly Cates, the management accountant, is disappointed with the results for May, prepared based on these standard costs:

17 18 19 20 21 22 Actual Budget Variance Units (litres) 225 000 200 000 25 000 F Revenues $177 500 F Direct materials 432 500 290 000 142 500 U Direct manufacturing labour 174 000 168 000 6 000 U Performance report, May 2015 A B C D E F G

$1 777 500 $1 600 000