Aunt Molly's Old Fashioned Cookies bakes cookies for retail stores. The company's best-selling cookie is the 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 Molly's normal monthly production of 400,000 pounds is as follows: Cost Item Quantity Standard Unit Cost Total Cost Direct material: Cookie mix 10 oz. $0.02 per oz. $0.20 Milk Chocolate 5 oz. $0.15 per oz. $0.75 Almonds 1 oz. $0.50 per oz. $0.50 Total $1.45 Direct Labor Mixing 1 min $14.40 per hr. $0.24 Baking 2 min $18.00 per hr. $0.60 Total $0.84 Cost Item Quantity Standard Unit Cost Total Cost Variable overhead 3 min $32.40 per direct-labor hr. $1.62 Total Standard cost per pound $3.91 Aunt Molly's management accountant, Karen Blair, prepares monthly budget reports based on these standard costs. The month of April's contribution report, which compares budgeted and actual performance, is shown in the following schedule. Contribution report for April: Static budget Actual Variance Favorable or unfavorable Units (in pounds) 400,000 450,000 50,000 Favorable Revenue $3,200,000 $3,555,000 $355,000 Favorable Direct material $580,000 $865,000 $285,000 Unfavorable Direct labor $336,000 $348,000 $12,000 Unfavorable Variable Overhead $648,000 $750,000 $102,000 Unfavorable Total variable costs $1,564,000 $1,963,000 $399,000 Unfavorable Contribution margin $1,636,000 $1,592,000 $44,000 Unfavorable 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 the analysis of the decrease. Usage report for April: Cost Item Quantity Actual cost Direct materials Cookie mix 4,650,000 oz. $93,000 Milk Chocolate 2,660,000 oz. $532,000 Almonds 480,000 oz. $240,000 Direct labor Mixing 450,000 min $108,000 Baking 800,000 min $240,000 Variable overhead $750,000 Total variable cost $1,963,000 What is the total variance between the flexible budget contribution margin and the actual contribution margin? Explain this total contribution margin variance by computing the following variances. (Assume all materials are used in the month of purchase). 1) direct- material quantity variance
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
Aunt Molly's Old Fashioned Cookies bakes cookies for retail stores. The company's best-selling cookie is the chocolate nut supreme, which is marketed as a gourmet cookie and regularly sells for $8.00 per pound. The
| Cost Item | Quantity | Standard Unit Cost | Total Cost |
|
Direct material: |
|||
| Cookie mix | 10 oz. | $0.02 per oz. | $0.20 |
| Milk Chocolate | 5 oz. | $0.15 per oz. | $0.75 |
| Almonds | 1 oz. | $0.50 per oz. | $0.50 |
| Total | $1.45 | ||
| Direct Labor | |||
| Mixing | 1 min | $14.40 per hr. | $0.24 |
| Baking | 2 min | $18.00 per hr. | $0.60 |
| Total | $0.84 | ||
| Cost Item | Quantity | Standard Unit Cost | Total Cost |
| Variable overhead | 3 min | $32.40 per direct-labor hr. | $1.62 |
| Total Standard cost per pound | $3.91 |
Aunt Molly's management accountant, Karen Blair, prepares monthly budget reports based on these standard costs. The month of April's contribution report, which compares budgeted and actual performance, is shown in the following
Contribution report for April:
| Static |
Actual | Variance | Favorable or unfavorable | |
| Units (in pounds) | 400,000 | 450,000 | 50,000 | Favorable |
| Revenue | $3,200,000 | $3,555,000 | $355,000 | Favorable |
| Direct material | $580,000 | $865,000 | $285,000 | Unfavorable |
| Direct labor | $336,000 | $348,000 | $12,000 | Unfavorable |
| Variable Overhead | $648,000 | $750,000 | $102,000 | Unfavorable |
| Total variable costs | $1,564,000 | $1,963,000 | $399,000 | Unfavorable |
| Contribution margin | $1,636,000 | $1,592,000 | $44,000 | Unfavorable |
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 the analysis of the decrease.
Usage report for April:
| Cost Item | Quantity | Actual cost |
| Direct materials | ||
| Cookie mix | 4,650,000 oz. | $93,000 |
| Milk Chocolate | 2,660,000 oz. | $532,000 |
| Almonds | 480,000 oz. | $240,000 |
| Direct labor | ||
| Mixing | 450,000 min | $108,000 |
| Baking | 800,000 min | $240,000 |
| Variable overhead | $750,000 | |
| Total variable cost | $1,963,000 |
What is the total variance between the flexible budget contribution margin and the actual contribution margin? Explain this total contribution margin variance by computing the following variances. (Assume all materials are used in the month of purchase).
1) direct- material quantity variance
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