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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 $8.00 per pound. The standard cost per pound of chocolate nut supreme, based on Aunt Mollys normal monthly production of 370,000 pounds, is as follows:

Cost Item	Quantity			Standard Unit Cost				Total Cost
Direct materials:
Cookie mix		10	oz.	$	0.10	per oz.		$	1.00
Milk chocolate		5	oz.		0.23	per oz.			1.15
Almonds		1	oz.		0.58	per oz.			0.58
								$	2.73
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								$	5.19

*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)		370,000			395,000			25,000	F
Revenue	$	2,960,000		$	3,120,500		$	160,500	F
Direct material	$	1,010,100		$	1,298,300		$	288,200	U
Direct labor		310,800			305,580			5,220	F
Variable overhead		599,400			658,335			58,935	U
Total variable costs	$	1,920,300		$	2,262,215		$	341,915	U
Contribution margin	$	1,039,700		$	858,285		$	181,415	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		4,025,000	oz.		$	402,500
Milk chocolate		2,350,000	oz.			658,000
Almonds		410,000	oz.			237,800
Direct labor:
Mixing		395,000	min.			94,800
Baking		702,600	min.			210,780
Variable overhead						658,335
Total variable costs					$	2,262,215

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

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).)