Comprehensive variance analysis. (CMA, adapted) Aunt Molly’s Old Fashioned Cookies bakes cookies for a chain of U.K. retail stores. The company’s best-selling cookie is chocolate nut supreme, which is marketed as a gourmet cookie and regularly sells flexible BUDGETS for $9.60 per kilogram. The standard input cost per kilogram of chocolate nut supreme, based on Aunt Molly’s normal monthly production of 400,000 kilograms, is cal¬
culated as follows:
Cost Item Standard Quantity Unit Costs Total Cost Direct materials:
Cookie mix 62 5 grams $0,384 per kg $0.24 Milk chocolate 312.5 grams $ 2.88 per kg 0.90 Almonds 1,000 g - 1 kg 62.5 grams $ 9.60 per kg 0.60 $1:74 Direct labour:*
.Mixing 1 minute $17.28 per hour $0,288 Baking 2 minutes 21.60 per hour 0.720 $1,008 *Direct labour rates include employee benefits.
Aunt Molly’s management accountant, Karen Blair, prepares monthly budget reports based on these standard costs. Presented here is April’s report, which compares budgeted and actual performance.
280 CHAPTER 7 Performance Report April 2007 Budget Actual Variance Units (in kilograms)* 400,000 450,000 50,000 F Revenue $3,840,000 $4,266,000 $426,000 F Direct material $ 696,000 $1,017,365 $321,365 U Direct labour $ 403,200 $ 453,600 $ 50,400 F *Units produced and sold Usage Report April 2007 Cost Item Quantity Actual Cost Direct materials:
Cookie mix 290,000 kilograms $111,360 Milk chocolate 161,720 kilograms $621,005 Almonds $1,017,365 total DM 29,688 kilograms $285,000 Direct labour:
Mixing 450,000 minutes 129,600 Baking 800,000 minutes 288,000 Required 1. Compute the following variances:

a. Selling-price variance

b. Material-price variance

c. Material-efficiency variance

d. Labour-price variance

e. Labour-efficiency variance 2. What explanations might exist for the variances in requirement 1?