s. Marron, Inc., produces the basic fillings used in many popular frozen desserts and treatsvanilla and chocolate ice creams, puddings, meringues, and fudge. Marron uses standard costing and carries over no inventory from one month to the next. The ice-cream product groups results for June 2012 were as follows:

Ted Levine, the business manager for ice-cream products, is pleased that more pounds of ice cream were sold than budgeted and that revenues were up. Unfortunately, variable manufacturing costs went up too. The bottom line is that contribution margin declined by $16,000, which is less than 1% of the budgeted revenues of $1,880,250. Overall, Levine feels that the business is running fine. Levine would also like to analyze how the company is performing compared to the overall market for ice-cream products. He knows that the expected total market for ice-cream products was 1,150,000 pounds and that the actual total market was 1,109,375 pounds. GloriaDee has a policy of analyzing all input variances when they add up to more than 10% of the total cost of materials and labor in the flexible budget, and this is true in May 2011. The production manager discusses the sources of the variances: A new type of material was purchased in May. This led to faster cutting and sewing, but the workers used more material than usual as they learned to work with it. For now, the standards are fine. Direct Materials Direct Manufacturing Labor Cost incurred: Actual inputs actual pr * ices $200,000 $90,000 Actual inputs standard pr * ices 214,000 86,000 Standard inputs allowed for actual output standard prices * 225,000 80,000 Static Budget Number of T-shirt lots (1 lot = 1 dozen) 500 Per Lot of T-shirts: Direct materials 12 meters at $1.50 per meter = $18.00 Direct manufacturing labor 2 hours at $8.00 per hour = $16.00 Actual Results Number of T-shirt lots sold 550 Total Direct Inputs: Direct materials 7,260 meters at $1.75 per meter = $12,705.00 Direct manufacturing labor 1,045 hours at $8.10 per hour = $8,464.50

Required 1. Calculate the static-budget variance in units, revenues, variable manufacturing costs, and contribution margin. What percentage is each static-budget variance relative to its static-budget amount? 2.

Break down each static-budget variance into a flexible-budget variance and a sales-volume variance.

3. Calculate the selling-price variance.

4. Calculate the market-share and market-size variances.

5. Assume the role of management accountant at Marron. How would you present the results to Ted Levine? Should he be more concerned? If so, why?

Home Insert Page Layout Formulas Data A B 1 Performance Report, June 2012 Actual 2 Results Static Budget 3 Units (pounds) 355,000 345,000 4 Revenues $1,917,000 $1,880,250 5 Variable manufacturing costs 1,260,250 1,207,500 6 Contribution margin $ 656,750 $ 672,750 Home Insert Page Layout Formulas Data A B 1 Performance Report, June 2012 Actual 2 Results Static Budget 3 Units (pounds) 355,000 345,000 4 Revenues $1,917,000 $1,880,250 5 Variable manufacturing costs 1,260,250 1,207,500 6 Contribution margin $ 656,750 $ 672,750