Flexible Budgeting and Variance Analysis Sharon's Delights Chocolate Company makes dark chocolate and light chocolate. Both products require cocoa and sugar. The following planning information has been made available: Cocoa Sugar Standard labor time Standard Amount Standard Amount per Case Dark Chocolate per Case Light Chocolate Standard Price per Pound 8 lbs. 6 lbs. 5 lbs. 4 lbs. $4.75 1.20 0.50 hr. 0.60 hr. Planned production Standard labor rate Dark Chocolate 4,000 cases $15.50 per hr. Light Chocolate 7,500 cases $15.50 per hr. Sharon's Delights Chocolate Company does not expect there to be any beginning or ending inventories of cocoa or sugar. At the end of the budget year, Sharon's Delights Chocolate Company had the following actual results: Actual production (cases) Dark Chocolate 4,500 Light Chocolate 8,000 Actual Price per Pound Actual Quantity Purchased and Used Cocoa $4.90 85,000 Sugar 1.24 53.000 Actual Labor Rate Actual Labor Hours Used Dark chocolate $15.25 per hr. 2,200 Light chocolate 15.80 per hr. 4,400 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. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. a. Direct materials price variance, direct materials quantity variance, and total variance. b. Direct labor rate variance, direct labor time variance, and total variance. a. Direct materials price variance Direct materials quantity variance Total direct materials cost variance b. Direct labor rate variance Direct labor time variance Total direct labor cost variance 2. The variance analyses should be based on the The budget must flex with the volume changes. If the amounts at volumes. volume is different from the planned volume, as it was in this case, then the budget used for performance evaluation should reflect the change in direct materials and direct labor that will be required for the volume changes can be separated from efficiency and price variances. production. In this way, spending from 5