Required information 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) [The following information applies to the questions displayed below) Colonial Cookies, Inc., 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 $9.00 per pound. The standard cost per pound of chocolate nut supreme, based on Colonial's normal monthly production of 210,000 pounds, is as follows: Total Cost Item Quantity Standard Unit Cost Cost Direct materials: Cookie mix 10 oz. $ 03 per oz. $.30 Milk chocolate 16 per oz 80 Almonds 1 oz 51 per oz. 51 5 OZ $ 161 Direct labor: Mixing Baking 1 min 2 min 14.40 per hr 18.00 per hr. $ 24 .60 *** | | | | | || $.84 Variable overheadt 3 min 32.40 per direct labor hr $162 Total standard cost per pound $407 "Direct-labor rates include employee benefits. tApplied on the basis of direct-labor hours. Colonial's management accountant, Karen Blair, prepares monthly budget reports based on these standard costs. February's contribution report, which compares budgeted and actual performance, is shown in the following schedule. Contribution Report for February Static Budget Actual Variance Units (in pounds) 210,000 235,000 25,000 F Revenue $1,890,000 $2,091,500 $201.500 F Direct material Direct labor Variable overhead $ 338,100 $ 492,150 $ 154,050 U 176.400 181.740 5,340 U 340,200 441,245 101,045 U Total variable costs $ 854700 $ 1.115.135 $260,435 U Contribution margin $1,035,300 $ 976,365 $ 58,935 U 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 February Cost Item Quantity Actual Cost Direct materials: Cookie mix 2.425,000 oz. $ 72,750 Milk chocolate 1,390,000 oz. 291,900 Almonds 250,000 oz. 127.500 Direct labor: Mixing 235,000 min. 56,400 Baking 417,800 min. 125,340 Variable overhead 441,245 Total variable costs $1.115,135 Case 11-55 Part 1 Required: 1. Prepare a new contribution report for February, 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 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.) Total 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. c. Direct-labor rate variance. d. Direct-labor efficiency variance e. Variable-overhead spending variance. f Variable-overhead efficiency variance. 9. Sales-price variance. Total
