Wide range variation analysis. (Adapted from CMA.) Iceland, Inc., is a producer of ice cream growing rapidly, the company's new ice cream flavor, Cherry Star, sells for $9 per pound. The standard monthly level of production is 300,000 pounds; inputs and standard costs are the following: 

Molly Cates, the finance director, is disappointed with the results for May 2011, which are presented stopped based on these standard costs.

Cates points out that, even despite a significant increase in pounds of ice cream sold in May, Cherry Star's contribution to the company's overall profitability has been lower than expected. Cates collects the following information to help analyze the situation

Calculate the following variations. Comment on the variations, paying special attention to the variations that can be related to each other and to the level of control of each variation: 1. The variation in the sale price, 2. The variance in the price of direct materials. 3 Variation in eliciency of materials is direct. 4. The variation in the efficiency of direct labor.

Cost Item Direct materials Cream Vanilla extract cherry Direct labor preparation Mezcladao Variable indirect costs Quantity Standard per pound unit costs of ice cream 12 oz $0,03 4oz 10 1,2 min 1,8 min 3 min /oz 0,12 /oz 0,45 /oz 14,4 /hr 18 /hr /hr 32,4 Performance Report, May 2011 real budgeted variation 300000 units (pounds) 275000 25000 D income $2502500 $2700000 $197500 D Direct materials 432500 387000 45500 D Direct labour 174000 248400 74400 F Consumer Report, May 2011 Consumption Quantity Actual item cost Direct materials Cream 3120000 $124800 oz Vanilla 1230000 Extract oz cherry 325000 oz Direct labor preparation 310000 min Mixed 515000 184500 133250 77500 154500