Case 11-55 Comprehensive Variance Analysis Used to Explain Operational Results; Review of Chapters 10 and 11; Activity-Based Costing; Sales Variances (Appendix B) (LO 11-4, 11-5, 11-7, 11-9) Skip to question [The following information applies to the questions displayed below.] 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 $10.00 per pound. The standard cost per pound of chocolate nut supreme, based on Aunt Mollys normal monthly production of 440,000 pounds, is as follows: Cost Item Quantity Standard Unit Cost Total Cost Direct materials: Cookie mix 10 oz. $ 0.08 per oz. $ 0.80 Milk chocolate 5 oz. 0.21 per oz. 1.05 Almonds 1 oz. 0.56 per oz. 0.56 $ 2.41 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 $ 4.87 *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) 440,000 465,000 25,000 F Revenue $ 4,400,000 $ 4,603,500 $ 203,500 F Direct material $ 1,060,400 $ 1,367,000 $ 306,600 U Direct labor 369,600 359,760 9,840 F Variable overhead 712,800 971,206 258,406 U Total variable costs $ 2,142,800 $ 2,697,966 $ 555,166 U Contribution margin $ 2,257,200 $ 1,905,534 $ 351,666 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 4,725,000 oz. $ 378,000 Milk chocolate 2,770,000 oz. 720,200 Almonds 480,000 oz. 268,800 Direct labor: Mixing 465,000 min. 111,600 Baking 827,200 min. 248,160 Variable overhead 971,206 Total variable costs $ 2,697,966

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.

2. What is the total contribution margin in the flexible budget column of the new report prepared for part (1)? (Do not round your intermediate calculations. Round your final answer to the nearest whole dollar amount.)

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 "0" for no effect (i.e., zero variance).)