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 Cocoa 9 lbs. 6 lbs. Sugar 7 lbs. 11 lbs. Standard labor 0.3 hr. 0.4 hr. time Standard Price per Pound $5.00 0.60 Planned production Standard labor rate Dark Chocolate Light Chocolate 3,900 cases $16.00 per hr. 10,700 cases $16.00 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) 3,700 11,100 Actual Price per Actual Pounds Purchased. Pound and Used Cocoa Sugar $5.10 100,400 0.55 144,300 Cocoa Sugar $5.10 0.55 100,400 144,300 Dark chocolate Light chocolate Actual Labor Rate $15.60 per hr. 16.40 per hr. Actual Labor Hours Used 1,010 4,550 Required: 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. 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 Unfavorable Unfavorable Unfavorable Unfavorable Unfavorable Unfavorable Vamounts at actual 2. The variance analyses should be based on the standard. actual CV 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 actual production. In this way, spending from volume changes can be separated from efficiency and price variances.