Aunt Variance Problem Cookies.docx - Aunt Molly's...

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Aunt Molly's Old-Fashioned Cookies 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 $8.00 per pound. The standard cost per pound of chocolate nut supreme, based on Aunt Molly's normal monthly production of 400,000 pounds, is as follows: Cost Item Quantity Standard Unit Cost ($) Total Cost ($) Direct materials: 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 1.45 Direct labor* Mixing 1 min. 14.40 per hr. 0 .24 Baking 2 min. 18.00 per hr 0.6 0.84 Variable Overheads# 3 min. 32.40 per hr. 1.62 Total Standard cost per pound 3.91 *Direct-labor rates include employee benefits # Applied on the basis of direct-labor hours, Aunt Molly's management accountant, Karen Blair, prepares monthly budget reports based on these standard costs. April's contribution report, which compares budgeted and actual performance, is shown in the following schedule.

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