Aunt Mollys Old Fashioned Cookies bakes cookies for retail stores. The companys best-selling cookie is chocolate nut supreme, which is marketed as a gourmet cookie and regularly sells for $9.00 per pound. The standard cost per pound of chocolate nut supreme, based on Aunt Mollys normal monthly production of 220,000 pounds, is as follows:

Cost Item	Quantity			Standard Unit Cost				Total Cost
Direct materials:
Cookie mix		10	oz.	$	0.04	per oz.		$	0.40
Milk chocolate		5	oz.		0.17	per oz.			0.85
Almonds		1	oz.		0.52	per oz.			0.52
								$	1.77
Direct labor:*
Mixing		1	min.		14.40	per hr.		$	0.24
Baking		2	min.		18.00	per hr.			0.60
								$	0.84
Variable overhead		3	min.		32.40	per direct-labor hr.		$	1.62
Total standard cost per pound								$	4.23

*Direct-labor rates include employee benefits.

Applied on the basis of direct-labor hours.

Aunt Mollys management accountant, Karen Blair, prepares monthly budget reports based on these standard costs. Aprils contribution report, which compares budgeted and actual performance, is shown in the following schedule.

Contribution Report for April
	Static Budget			Actual			Variance
Units (in pounds)		220,000			245,000			25,000	F
Revenue	$	1,980,000		$	2,180,500		$	200,500	F
Direct material	$	389,400		$	555,200		$	165,800	U
Direct labor		184,800			189,480			4,680	U
Variable overhead		356,400			460,021			103,621	U
Total variable costs	$	930,600		$	1,204,701		$	274,101	U
Contribution margin	$	1,049,400		$	975,799		$	73,601	U

Justine Madison, president of the company, is disappointed with the results. Despite a sizable increase in the number of cookies sold, the products expected contribution to the overall profitability of the firm decreased. Madison has asked Blair to identify the reason why the contribution margin decreased. Blair has gathered the following information to help in her analysis of the decrease.

Usage Report for April
Cost Item	Quantity				Actual Cost
Direct materials:
Cookie mix		2,525,000	oz.		$	101,000
Milk chocolate		1,450,000	oz.			319,000
Almonds		260,000	oz.			135,200
Direct labor:
Mixing		245,000	min.			58,800
Baking		435,600	min.			130,680
Variable overhead						460,021
Total variable costs					$	1,204,701
2. What is the total contribution margin in the flexible budget column of the new report prepared for part (1)?

4. What is the total variance between the flexible budget contribution margin and the actual contribution margin in the new report prepared for part (1)? Calculate the total contribution margin variance by computing the following variances. (Assume that all materials are used in the month of purchase.). (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).) a. Direct-material price variance. b. Direct-material quantity variance. Direct-labor rate variance. Direct-labor efficiency variance. e. Variable-overhead spending variance. f. Variable-overhead efficiency variance. Sales-price variance. Total Required: 1. Prepare a new contribution report for April, in which: The static budget column in the contribution report is replaced with a flexible budget column. The variances in the contribution report are recomputed as the difference between the flexible budget and actual columns. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).) Flexible Budget Actual Variance Units (in pounds) Revenue Direct material Direct labor Variable overhead Total variable costs Contribution margin 4. What is the total variance between the flexible budget contribution margin and the actual contribution margin in the new report prepared for part (1)? Calculate the total contribution margin variance by computing the following variances. (Assume that all materials are used in the month of purchase.). (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).) a. Direct-material price variance. b. Direct-material quantity variance. Direct-labor rate variance. Direct-labor efficiency variance. e. Variable-overhead spending variance. f. Variable-overhead efficiency variance. Sales-price variance. Total Required: 1. Prepare a new contribution report for April, in which: The static budget column in the contribution report is replaced with a flexible budget column. The variances in the contribution report are recomputed as the difference between the flexible budget and actual columns. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).) Flexible Budget Actual Variance Units (in pounds) Revenue Direct material Direct labor Variable overhead Total variable costs Contribution margin