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) 4(3). Direct-material price variance, total: $133,000 U 4(e). Variable-overhead spending variance: $75,000 U 4(g). Sales-price variance: $45,000 U Aunt Molly's Old Fashioned Cookies bakes cookies for retail stores. The company's best-selling cookie is chocolate nut supreme, which is marketed as a gourmet cookie and regularly sells for $8.00 per pound. The standard cost per pound of chocolate nut supreme, based on Aunt Molly's normal monthly production of 400,000 pounds, is as follows: standard Quantity Unit Coat Total Cost Cost Item Direct materials: 10 az. 5.02 per az. 5 .20 Cookie mix . . . . . . . . . . . . 5 0z .15 per oz. .75 Milk chocolate . 1 0z .50 per DZ. .50 Almonds . $1.45 . . . .. Direct labor: . . . 1 min. $14.40 per hr. S 24 Mixing . - 2 min. 18.00 per hr. .60 Baking - . . . . . $ 84 3 min. $32.40 per direct-labor hr. $1.62 Variable averhead - $3.91 Total standard cost per pound . . Direct-labor rates include amplayan benefits. Applied on the basis of dimct-labor hours. Aunt Molly's management accountant, Karen Blair, prepares monthly budget reports based on there standard costs. April's contribution report, which compares budgeted and actual performance, is shown in the following schedule. Contribution Report for April Static Actual Variance Budget 400,000 450.000 50,000 F Units (in pounds) $3,200,000 $3.565,000 $355,000 F Revenue .. $ 580,000 $ 865,000 $285,000 U Direct material . 336,000 348.000 12,000 Direct labor . 648,000 750.000 102,000 U Variable averhead . $1,564,000 $1,963,000 $399,000 U Total variable costs . $1,636,000 $1.592,000 $ 44,000 L Contribution margin. . Justine Madison, president of the company, is disappointed with the results. Despite a sizable increase in the number of cookies sold, the product's 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 Quantity Actual Cost Cost Item Direct materials: 4,650,000 az. 93,000 Cookie mix . . .. 2,660,000 az. 532,000 Milk chocolate . 480,000 Dz 240,000 Almonds. Direct labor 450,000 min. 108,000 Mixing . 800,000 min. 240,000 Baking - . . . 750,000 . . . . . . .. Variable overhead $1,963,000 . . . . . . .... Total variable costs