Aunt Molly€™s Old Fashioned Cookies bakes cookies for a chain of retail stores. The company€™s best-selling cookie is Chocolate Nut Supreme, which is marketed as a gourmet cookie and regularly sells 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 calculated as follows:

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.

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?

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Standard Quantity Cost Item Unit Cost Total Cost Direct materials: Cookie mix Milk chocolate Almonds 1,000 g = 1 kg S0.384 per kg S2.88 per kg s9.60 per kg $0.24 0.90 0.60 $1.74 312.5 g Direct labour Mixing Baking S17.28 per hour S21.60 per hour $0.288 0.720 $1.008 minute 2 minutes Performance Report April 2013 Budget Actual Variance 400,000 S3,840,000 S 696,000 s 403,200 Units (in kilograms) 450,000 Revenue Direct material Direct labour $4,266,000 $1,017,365 S 453,600 1 50,000 F S 426,000 F $ 321,365 U S 50,400 U "Units produced and sold Usage Report April 2013 Cost Item Quantity Actual Cost Direct materials: Cookie mix Milk chocolate Almonds 1,000 g 1 kg 290,000 kg 161,720 kg 29,688 kg $111,360 $621,005 $285,000 Direct labour Mixing Baking 450,000 minutes 800,000 minutes $129,600 $288,000