Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis

Flexible Budgeting and Variance Analysis

Belgian 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	12 lbs.		9 lbs.		$5.30
Sugar	10 lbs.		14 lbs.		0.60
Standard labor time	0.40 hr.		0.50 hr.

	Dark Chocolate		Light Chocolate
Planned production	4,600 cases		10,800 cases
Standard labor rate	$16.50 per hr.		$16.50 per hr.

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

	Dark Chocolate		Light Chocolate
Actual production (cases)	4,400		11,200
	Actual Price per Pound		Actual Pounds Purchased and Used
Cocoa	$5.40		154,400
Sugar	0.55		195,800
	Actual Labor Rate		Actual Labor Hours Used
Dark chocolate	$16.00 per hr.		1,600
Light chocolate	17.00 per hr.		5,740

Required:

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

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

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	$	favorable or unfavorable?
	Direct materials quantity variance	$	favorable or unfavorable?
	Total direct materials cost variance	$	favorable or unfavorable?
b.	Direct labor rate variance	$	favorable or unfavorable?
	Direct labor time variance	$	favorable or unfavorable?
	Total direct labor cost variance	$	favorable or unfavorable?