13 . Flexible Budgeting and Variance Analysis

I Love My Chocolate Company makes dark chocolate and light chocolate. Both products require cocoa and sugar. The following planning information has been made available:

Standard Amount per Case
	Dark Chocolate		Light Chocolate		Standard Price per Pound
Cocoa	11 lbs.		8 lbs.		$5.40
Sugar	9 lbs.		13 lbs.		0.60
Standard labor time	0.4 hr.		0.5 hr.

	Dark Chocolate		Light Chocolate
Planned production	4,700 cases		13,200 cases
Standard labor rate	$15.50 per hr.		$15.50 per hr.

I Love My Chocolate Company does not expect there to be any beginning or ending inventories of cocoa or sugar. At the end of the budget year, I Love My Chocolate Company had the following actual results:

	Dark Chocolate		Light Chocolate
Actual production (cases)	4,500		13,700
	Actual Price per Pound		Actual Pounds Purchased and Used
Cocoa	$5.50		159,900
Sugar	0.55		213,100
	Actual Labor Rate		Actual Labor Hours Used
Dark chocolate	$15.20 per hr.		1,640
Light chocolate	15.80 per hr.		7,020

Required:

1. Prepare the following variance analyses for both chocolates and the total, based on the actual results and production levels at the end of the budget year:

a. Direct materials price variance, direct materials quantity variance, and total variance.

b. Direct labor rate variance, direct labor time variance, and total variance.

Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. If there is no variance, enter a zero.

a.	Direct materials price variance	$fill in the blank 1	FavorableUnfavorableUnfavorable
	Direct materials quantity variance	$fill in the blank 3	FavorableUnfavorableUnfavorable
	Total direct materials cost variance	$fill in the blank 5	FavorableUnfavorableUnfavorable
b.	Direct labor rate variance	$fill in the blank 7	FavorableUnfavorableUnfavorable
	Direct labor time variance	$fill in the blank 9	FavorableUnfavorableUnfavorable
	Total direct labor cost variance	$fill in the blank 11	FavorableUnfavorableUnfavorable