Creamy Mist Ltd is an ice cream parlour. It started operations two years ago. Creamy Mist prepares its ice creams by combining two or three flavours and its secret milk sauce. Creamy Mist's parlour is in a popular location and has gained a lot of attention since its opening.
The focus of Creamy Mist is to provide a quick service to its customers and to maintain consistency in the quality and taste of its ice creams. To maintain consistency in the flavour of its ice creams, Creamy Mist has set standard quantities of ingredients that should be used. It has also set standard times within which each ice cream should be prepared. The parlour has a supervisor who provides inputs to the operations manager regarding the performance of the parlour and its employees. Creamy Mist opened its second outlet in Year 2. Creamy Mist also started serving cupcakes and cookies at its second outlet.\ The operations manager of Creamy Mist found that the second outlet is running at a loss. It is not able to maintain the quality and taste standards of the ice creams. The operations manager also realized that the time taken to prepare the ice creams is more in the second outlet compared to the first outlet. The second outlet is unable to serve all ice creams on the menu, and it has been identified that the wastage of ingredients is quite high. This wastage of ingredients has caused further harm as there has been a steady rise in the price of milk for the past six months. Recently, many employees in the second outlet have left their jobs. The employees who have resigned had concerns of being overly controlled and being blamed for problems they did not have control over. It has also been identified that the employees in the second outlet had not received information on the standard quantities of ingredients. Because of these problems, Creamy Mist is on the verge of closing its second outlet, and these problems have affected the performance of the first outlet as well. For effective performance management, all ice cream parlours should focus on setting benchmarks or norms for measuring their performance and should take corrective actions to reduce variances.

Required
1. Outline what will help Creamy Mist in maintaining consistency in the taste and quality of its ice creams across outlets.
2. The problems faced by Creamy Mist can be identified and solved by implementing the variance analysis approach. Outline the steps that they should follow.

3. According to variance analysis and management by exception, which variances in the second outlet of Creamy Mist should be investigated by the management.

4. Who is responsible for controlling the material rate variance arising in the second outlet of Creamy Mist?

5. Many employees in the second outlet of Creamy Mist have left their jobs, and this has resulted in an unfavourable labour efficiency variance. Identify a factor responsible for the unfavourable labour efficiency variance.

6. Creamy Mist should implement a standard costing system to improve its performance. Explain the advantages of a standard costing system.

7. Creamy Mist has already set the standard quantities of ingredients that should be used in the preparation of each of its ice creams. Identify the equation used to determine the materials quantity variance.

8. Identify the features of practical standards that should be set by Creamy Mist to easily manage by exception.