b) Capacity analysis

i) analysis that highlights idle capacity costs by analyzing 20X7 total manufacturing overhead costs (Exhibit 4), similar to the approach in Topic 2.3-10. Practical capacity is 12,000 direct labour hours (Note: Round the manufacturing overhead costs to the nearest dollar; however, do not round the MPH rate calculated when calculating the total costs.)

ii) Explain the purpose of this analysis to management and the information it provides in relation to capacity utilization.

c) Based on the results of requirements 1, 2, and 3 above, briefly comment on the manufacturing costs.

Exhibit 4 Other budgeted and actual schedules are provided below to help with the analysis. Actual quantity and cost of direct ingredients For the year ended December 31, 20X7 Ingredient Price The-Bar Alamonde Salt-Lick Total Quantity Cost Quantity Cost Quantity Cost Quantity Cost Chocolate liquor $5.55/kg 27,160 $150,738 18,480 $102,564 8,894 $49,359 54.534 $302,661 Cocoa butter $6.10/kg 10,321 62,957 7,022 42,837 2,753 16,792 20.096 122,586 Cocoa powder $1.18/kg 5,432 6,410 2,218 2,617 2,118 2,499 9,768 11,525 Cane sugar $0.70/kg 10,321 7,225 7.022 4.916 6.247 4,372 23,590 16,513 Emulsifier $0.80/kg 462 369 739 590 212 169 1,413 1,129 Vanilla $70/litre 625 43,728 370 25,872 424 29,645 1,418 99,245 Almonds $10/kg 1,109 11,088 1,109 11,088 Himalayan salt $5.50/kg 529 2,912 529 2,912 Cost of ingredients $271,427 $190,484 $105,748 $567,659 Wrappers $0.08/bar 776,000 62,080 528,000 42,240 302,500 24,200 1,606,500 128,520 Total cost $333,507 $232,724 $129,948 $696,179 Budgeted quantity and cost of direct ingredients For the year ended December 31, 20X7 Ingredient Price The-Bar Alamonde Salt-Lick Total Quantity Cost Quantity Cost Quantity Cost Quantity Cost Chocolate liquor $5.50/kg 27,104 $149,072 18,519 $101,852 8,861 $48,736 54,484 $299,660 Cocoa butter $6.00/kg 10,300 61,797 7,037 42,222 2,743 16,456 20,079 120,476 Cocoa powder $1.15/kg 5,421 6,234 2,222 2,556 2,110 2,426 9,753 11,216 Cane sugar $0.70/kg 10,300 7,210 7,037 4,926 6.224 4,357 23,560 16,492 Emulsifier $0.80/kg 461 369 741 593 211 169 1,412 1,130 Vanilla $70/litre 625 43,637 370 25,926 424 29,537 1,418 99, 101 Almonds $10/kg 1,109 11,111 1,109 11,111 Himalayan salt $5.50/kg 529 2,901 529 2,901 Cost of ingredients $268,319 $189, 186 $104,582 $562,087 Wrappers $0.08/bar 776,000 61,952 528,000 42,328 302,500 24,112 1,606,500 128,392 Total cost $330,271 $231,514 $128,694 $690,479 Actual direct labour For the year ended December 31, 20X7 The-Bar Alamonde Salt-Lick Total Direct labour hours 4,105 3,744 2, 125 9,974 Cost per direct labour hour 33.10 $ 33.10 33.10 33.10 Total actual direct labour costs 135,876 $ 123,926 $ 70,338 $ 330, 140