Capacity analysis

i) A 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.

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