Iceland, Inc., is a fast-growing ice-cream maker. The company's new ice-cream flavor, Cherry Star, sells for $9
Question:
Iceland, Inc., is a fast-growing ice-cream maker. The company's new ice-cream flavor, Cherry Star, sells for $9 per pound. The standard monthly production level is 300,000 pounds, and the standard inputs and costs are as follows:
Molly Cates, the CFO, is disappointed with the results for May 2011, prepared based on these standard costs.
Cates notes that despite a sizable increase in the pounds of ice cream sold in May, Cherry Star's contribution to the company's overall profitability has been lower than expected. Cates gathers the following information to help analyze the situation:
RequiredCompute the following variances. Comment on the variances, with particular attention to the variances that may be related to each other and the controllability of each variance:1. Selling-price variance2. Direct materials price variance3. Direct materials efficiency variance4. Direct manufacturing labor efficiencyvariance
Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 978-0132109178
14th Edition
Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav