Colonial Cookies, Inc., 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 Colonials normal monthly production of 370,000 pounds, is as follows:

Cost Item	Quantity			Standard Unit Cost			Total Cost
Direct materials:
Cookie mix		10	oz.	$	.10	per oz.	$	1.00
Milk chocolate		5	oz.		.23	per oz.		1.15
Almonds		1	oz.		.58	per oz.		.58
							$	2.73
Direct labor:*
Mixing		1	min.		14.40	per hr.	$	.24
Baking		2	min.		18.00	per hr.		.60
							$	.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.

Colonials management accountant, Karen Blair, prepares monthly budget reports based on these standard costs. Februarys 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)		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 February
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

rev: 10_07_2015_QC_CS-27359, 10_08_2015_QC_CS-27359

Case 11-55 Part 4

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).)

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	Variance-overhead efficiency variance
g	Sales-price variance
	Total