[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 $10.00 per pound. The standard cost per pound of chocolate nut supreme, based on Colonial's normal monthly production of 300,000 pounds, is as follows: Quantity Standard Unit Cost Total Cost Cost Item Direct materials: Cookie mix Milk chocolate Almonds $ 10 oz. 5 oz. 1 oz. .03 per oz. .16 per oz. .51 per oz. $ .30 .80 .51 $ 1.61 Direct labor:* Mixing Baking $ .24 1 min. 2 min. 14.40 per hr. 18.00 per hr. .60 $.84 Variable overheadt 3 min. 32.40 per direct-labor hr. Total standard cost per pound $4.07 *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) 300,000 325,000 25,000 F Revenue $3,000,000 $3,217,500 $ 217,500 F Direct material Direct labor Variable overhead $ 483,000 $ 678,450 $195,450 U 252,000 251,400 600 F 486,000 678,799 192,799 U Total variable costs $ 1,221,000 $1,608,649 $387,649 U Contribution margin $ 1,779,000 $1,608,851 $ 170,149 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 3,325,000 oz. $ 99,750 Milk chocolate 1,930,000 oz. 405,300 Almonds 340,000 oz. 173,400 Direct labor: Mixing 325,000 min. 78,000 Baking 578,000 min. 173,400 Variable overhead 678,799 Total variable costs $1,608,649 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 Favorable Unfavorable None