12.48 ** 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 200 000 litres, and the standard inputs and costs per litre are: File Home Insert A Page Layout Formulas Data Review View TDIE Quantity per Standard litre of ice-cream unit costs 1 2 3 4 Cost item Direct materials Cream Vanilla extract Cherry 10 g $0.02 lg 0.15 / 0.50 / 6 8 Direct manufacturing labour 9 Preparing 10 Stirring 1 min 2 min 14.40 /h 18.00 /h 32.40 /h 12 Variable overhead 3 min 13 14 "Direct manufacturing labour rates include employee benefits. 15 Allocated on the basis of direct manufacturing labour-hours. Molly Cates, the management accountant, is disappointed with the results for May. prepared based on these standard costs: Add-Ins F G Variance File Home Insert Page Layout Formulas Data Review View | D E 17 Performance report, May 2019 18 Actual Budget 19 Units (litres) 225 000 200 000 20 Revenues $1 777 500 $1 600 000 21 Direct materials 432 500 290 000 | 22 Direct manufacturing labour 174 000 168 000 25 000 $177 500 F 142 500 U 6 000U Molly notes that, despite a sizeable increase in the litres of ice-cream sold in May. Cherry Star's contribution to the company's overall profitability has been lower than expected. Molly gathers the following information to help analyse the situation: File Vi 26 Home Insert Page Layout Formulas Data Review 25 Usage report, May 2019 Cost item Quantity Actual cost 27 Direct materials 28 Cream 2 325 000 g $46 500 29 Vanilla extract 1 330 000 g 266 000 30 Cherry 240 000 g 120 000 31 32 Direct manufacturing labour 33 Preparing 225 000 min 54 000 34 Stirring 400 000 min 120 000 Required Calculate 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 variance 2. direct materials price variance 3. direct materials efficiency variance 4. direct manufacturing labour efficiency variance