Alpine, Inc. produces the basic fillings used in many popular frozen desserts and treatslong dashvanilla and chocolate ice creams, puddings, meringues, and fudge. Alpine uses standard costing and carries over no inventory from one month to the next. The ice-cream product group's results for June 2014 were as follows:

Performance Report, June 2014
	Actual	Static
	Results	Budget
Units (pounds)	460,000	447,000
Revenues	$2,626,600	$2,592,600
Variable manufacturing costs	1,651,400	1,564,500
Contribution margin	$975,200	$1,028,100

Jason Baum, the business manager for ice-cream products, is pleased that more pounds of ice cream were sold than budgeted and that revenues were up.Unfortunately, variable manufacturing costs went up, too. The bottom line is that contribution margin declined by $52,900, which is less than 22% of the budgeted revenues of $2,592,600. Overall, Baum feels that the business is running fine.

Requirements 1 and 2. Calculate the static-budget variance in units, revenues, variable manufacturing costs, and contribution margin. What percentage is each static-budget variance relative to its static-budget amount? Break down each static-budget variance into a flexible-budget variance and a sales-volume variance.

Begin with the flexible budget columns, then enter in the sales volume variance and static budget variances. Finally, compute the static budget variance as a percentage of the static budget. Label each variance as favorable (F) or unfavorable (U). (For variances with a $0 balance, make sure to enter "0" in the appropriate field. If the variance is zero, do not select a label. Round dollar amounts to the nearest whole dollar and percentages to two decimal places, X.XX%.)

		Flexible-
	Actual	Budget		Flexible
	Results	Variances		Budget
Units (pounds)
Revenues
Variable mfg. costs
Contribution margin
Sales-			Static-
Volume		Static	Budget
Variances		Budget	Variances
SB variance
% of Static
Budget
	%
	%
	%
	%

Requirement 3. Calculate the selling-price variance.

The selling-price variance is $_________, favorable or unfavorable.

Requirement 4. Assume the role of management accountant at Alpine. How would you present the results to Jason Baum? Should he be more concerned? If so, why?

The flexible-budget variances show that for the actual sales volume of 460,000 pounds, selling prices were higher or lower and costs per pound were higher or lower.

The favorable or unfavorable sales-volume variance in revenues adds to or offsets the favorable or unfavorable variable-cost variance.

Baum should be more or not be concerned because the small static-budget variance in contribution margin is actually made up of a(n) favorable or unfavorable sales-volume variance in contribution margin, a(n) favorable or unfavorable selling-price variance, and a(n) favorable or unfavorable variable manufacturing costs variance. Baum need not be concerned with these variances should or analyze why each of these variances occurred and the relationships among them

.