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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 10 lbs. 7 lbs. $5.10 Sugar 8 lbs. 12 lbs. 0.60 Standard labor time 0.3 hr. 0.4 hr. Planned production Standard labor rate Dark Chocolate Light Chocolate 3,800 cases 12,300 cases $16.50 per hr. $16.50 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: Light Chocolate Dark Chocolate Actual production (cases) 3,600 12,800 Actual Price per Pound Actual Pounds Purchased and Used Cocoa Sugar $5.20 126,200 0.55 177,800 Actual Labor Rate Actual Labor Hours Used Dark chocolate Light chocolate Required: Actual Labor Rate Actual Labor Hours Used $16.20 per hr. 980 16.80 per hr. 5,250 1. Prepare the following variance analyses for both chocolates and the total, based on the actual results and production levels at the end of the budget year: a. Direct materials price variance, direct materials quantity variance, and total variance. b. 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. a. Direct materials price variance Direct materials quantity variance Total direct materials cost variance I -1,020 X 1,020 X Unfavorable Unfavorable -1,920 X Unfavorable b. Direct labor rate variance 15,200 X Unfavorable Direct labor time variance 15,200 X Unfavorable Total direct labor cost variance 34,400 X Unfavorable 2. The variance analyses should be based on the standard volumes. The budget must flex with the volume changes. If the actual amounts at actual volume is different from
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