Colonial Cookies, Inc, bakes cookies for retail stores. The company\'s best-sell
ID: 2551268 • Letter: C
Question
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 380,000 pounds, is as follows: Total Cost Cost Item Direct materials Quantity Standard Unit Cost Cookie mix Milk chocolate Almonds 10 oz. 5 oz. 1 oz. $ .02 per oz 15 per oz 50 per oz $.20 75 50 %1.45 Direct labor: Mixing Baking 1 min. 2 min. 14.40 per hr 18.00 per hr $.24 60 $.84 Variable overheadt 32.40,per direct-labor 3 min. $1.62 hr. Total standard cost per pound $3.91 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) 380,000 405,000 25,000 F Revenue $3,420,000 $3,604,500 $ 184,500F Direct materia $551,000 $ 774,500 $223,500 U Direct labor Variable overhead 615,600 760,445 144,845 U 319,200 313,320 5,880 F Total variable costs $1,485,800 $1,848,265 $362,465 UExplanation / Answer
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Standard Actual at Standard Actual Quantity/Hour Per Unit Rate Value Quantity/Hour Rate Value Quantity/Hour Rate Value Cookie 10 0.02 0.2 4050000 0.02 81000 4125000 0.02 82500 Milke Choco 5 0.15 0.75 2025000 0.15 303750 2410000 0.20 482000 Almonds 1 0.5 0.5 405000 0.5 202500 420000 0.50 210000 Labor-Mixing 1/60 14.4 0.24 6750 14.4 97200 6750 14.40 97200 Baking 2/60 18 0.6 13500 18 243000 12007 18.00 216120 Overhead-Variable 3/60 32.4 1.62 20250 32.4 656100 18757 40.54 760445 Total 1583550 1848265 a. Direct Material Price Variance AQ(AP-SP) Cookie 4125000(0.02-0.02) 0 Milke Choco 2410000(0.2-0.15) 120500 U Almonds 420000(0.5-0.5) 0 Total Direct Material Price Variance 120500 U b. Direct Material Quantity Variance SP(AQ-SQ) Cookie 0.02(4125000-4050000) 1500 U Milke Choco 0.15(2410000-2025000) 57750 U Almonds 0.5(420000-405000) 7500 U Total Direct Material Quantity Variance 66750 U c. Direct Labor Rate Variance AH(AR-SR) Labor-Mixing 6750(14.4-14.4) 0 Baking 13500(18-18) 0 Total Direct Labor Rate Variance 0 d. Direct Labor efficiency Variance SR(AH-SH) Labor-Mixing 14.4(6750-6750) 0 Baking 18(12007-13500) -26874 F Total Direct Labor Efficiency Variance -26874 F g. Sales Price Variance Standard Sales Price 9 Actual Sales Price 3604500/405000 8.9 Variance 0.1 Acutal Sale Quantity 405000 Sales Price Variance 40500 U