Reference no: EM131300989

Emiko-Pia Chocolate Cookies bakes cookies for retail stores. Their financial information is provided below. You have been hired as a consultant working for the company to reply to the management's questions and write a report. Your report should be professional and add value to the company. Use an executive summary, followed by the detailed report. 

The report (beyond the cover page) should be in APA format and start with an executive summary.  This is a one-page summary of your findings and conclusions that can stand alone.  It should provide links to where more in-depth analysis is found in the paper.  One easy way to structure your executive summary is to use a memo template from Word.  Keep in mind that your boss might read your entire report, but your boss's boss might only read the executive summary.  Your conclusions should JUMP out at the reader.  You can use bullets, bold, tables, and any other formatting tool to enhance the readability of the report.

After the executive summary, you will write the report.  The report will include the comprehensive analysis and answers to the management questions. You will need to use proper APA style in-text and end-text citations to support your points.

Management's Questions:

1. Prepare a new contribution report for December, in which:

a. The static budget column in the contribution report is replaced with a flexible budget column.

b. The variances in the contribution report are recomputed as the difference between the flexible budget and actual columns.

2. What is the total contribution margin in the flexible budget column of the new report prepared for requirement (1)?

3. Explain (i.e., interpret) the meaning of the total contribution margin in the flexible budget column of the new report prepared for requirement (1).

4. What is the total variance between the flexible budget contribution margin and the actual contribution margin in the new report prepared for requirement (1)?

Explain this total contribution margin variance by computing the following variances. (Assume that all materials are used in the month of purchase.)

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. Variable-overhead efficiency variance.

g. Sales-price variance.

5. a. Explain the problems that might arise in using direct-labor hours as the basis for applying overhead.

b. How might activity-based costing (ABC) solve the problems described in requirement (5a)?

6. Argue for the use of Activity-based Costing by in this case by:

a. Describe when Activity-based Costing is appropriate and when Traditional Costing is appropriate and when each is not appropriate to use.

b. Discuss what are the strengths and weaknesses of ABC? When is it appropriate to use? What kinds of business situations suggest the need for ABC?

Attachment:- Assignment.rar