Question
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
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 lb. | 8 lb. | $5.4 | |||
Sugar | 9 lb. | 13 lb. | 0.6 | |||
Standard labor time | 0.4 hr. | 0.5 hr. |
Dark Chocolate | Light Chocolate | |||
Planned production | 4,900 cases | 13,600 cases | ||
Standard labor rate | $15 per hr. | $15 per hr. |
I Love My Chocolate 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) | 4,700 | 14,100 | ||
Actual Price per Pound | Actual Pounds Purchased and Used | |||
Cocoa | $5.5 | 165,300 | ||
Sugar | 0.55 | 220,000 | ||
Actual Labor Rate | Actual Labor Hours Used | |||
Dark chocolate | $14.6 per hr. | 1,710 | ||
Light chocolate | 15.4 per hr. | 7,230 |
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 | $ | |
Direct materials quantity variance | $ | ||
Total direct materials cost variance | $ | ||
b. | Direct labor rate variance | $ | |
Direct labor time variance | $ | ||
Total direct labor cost variance | $ |
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