Answer Happy

Question 5 Gamma Pty Ltd produces the basic fillings used in many popular frozen desserts and treats- vanilla and chocolate ice creams, puddings, meringues, and fudge. Gamma uses standard costing and carries over no inventory from one month to the next. The ice-cream product group's results for April 2022 were as follows: Performance Report for April 2022 Actual Results Static Budget Units (pound) 350.000 335.000 Revenues $2,012,500 $1,976,500 Variable manufacturing costs 1.137.500 1,038,500 Contribution margin $ 875.000 $ 938,000 The manager for ice-cream products, is pleased that more pounds of ice cream were sold than budgeted and that revenues were up. Unfortunately, variable manufacturing costs went up too. The bottom line is that contribution margin declined by $63,000, which is less than 3% of the budgeted revenues of $1,976,500. Overall, the manager feels that the business is running fine. Required: a. Calculate the static-budget variance in units, revenues, variable manufacturing costs, and contribution margin. What percentage is each static-budget variance relative to its static-budget amount? b. Break down each static-budget variance into a flexible-budget variance and a sales- volume variance. Calculate the selling-price variance. d. Assume the role of management accountant at Gamma. How would you present the results to the manager? Should he be more concerned? If so, why? c.