At the monthly management meeting, Leslie Smith, president of Mama Fran's Fantastic Foods, was reviewing the April budget report with some satisfaction. "Our actual results are never exactly what we budget, butI guess if we're off by only 2% to 3%, we've done a good job forecasting." The report she referred to follows. April Budget Report Actual Budget Variance Sales (in pounds) 50000 F Revenues Less Variable Expenses Direct Materials 865,000 348,000 580,000 336,000 285,000 U Direct Labor Variable Overhead Total Variable Expenses Contribution Margin 102,000 U 399,000U S 44,000 U) 1,963,000 $1592,000 1,564,000 Nathan Porter, the company's purchasing manager, chimed in. "It surprises me that we did as well as we did. I know that chocolate prices went up dramatically last month, so I expected a much larger variance. And we had that little mix-up when we ordered a batch of whole almonds instead of sliced almonds." But controller Ashley Corley looked concerned. "Hang on a minute, guys. I don't think this budget report gives us the true picture. Let me work on it some more and get back to you." Ashley's first step was to track down the following standard cost card for the cookies. Chocolate Nut Supreme Cookies Direct Materials 10 ounces 5 ounces 1 ounce $0.02 per ounce $0.15 per ounce $0.50 per ounce $0.20 0.75 0.50 Cookie Mix Milk chocolate Almonds Total direct materials Direct Labor $1.45 Mixing Baking 1 minute $%14.40 per hour 0.24 2 minutes $18.00 per hour0.60 Total direct labor Variable Overhead 0.84 1.62 $3.91 3 minutes 32.40 per hour Total Standard cost per pound Ashley also tracked down this additional information about the month's operations Actual Cost Item Direct Materials $ 93,000 532,000 240,000 4,650,000 ounces 2,660,000 ounces 480,000 ounces Cookie Mix Milk Chocolate Almonds Direct Labor 108,000 240,000 750,000 $1.963,000 540,000 minutes 800,000 minutes Mixing Baking Variable overhead Total Actual variable costs Required: Prepare a more informative performance report for the month of April. Are the results better or worse than Leslie had first thought? Explain your answer Calculate the direct materials variances for each input, assuming that all materials purchased were used during the month. Calculate the direct labor variances for April. Calculate the variable overhead variances for April. What do you think may have caused the April variances? a. b. c. d. e. f. Align Group R ard Backward Pane The first part needs to be filled out on a chart like this Unit costActual Flex-budget Unfavorable Flexible budget results variances or favorable Sales volume Unfavorable Static varianceor favorable budget Unit sales
