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 Light Standard Price per Chocolate Chocolate Pound Cocoa 11 lbs. $4.70 8 lbs. 13 lbs. Sugar 9 lbs. 0.60 Standard labor time 0.4 hr. 0.5 hr Dark Chocolate Light Chocolate Planned production 5,600 cases 10,900 cases Standard labor rate $14.50 per hr $14.50 per hr I Love My Chocolate Company 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 5,300 11,300 (cases) Actual Price per Actual Pounds Purchased Pound and Used 149,400 Cocoa $4.80 DEE 009 Total direct labor cost variance 2. The variance analyses should be based on the amounts at volumes. The budget must flex with the volume changes. If the 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 production. In this way, spending from volume changes can be separated from efficiency and price variances