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 | 12 lbs. | 9 lbs. | $4.60 | |||
Sugar | 10 lbs. | 14 lbs. | 0.60 | |||
Standard labor time | 0.3 hr. | 0.4 hr. |
Dark Chocolate | Light Chocolate | |||
Planned production | 4,500 cases | 13,300 cases | ||
Standard labor rate | $13.50 per hr. | $13.50 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 (cases) | 4,300 | 13,800 | ||
Actual Price per Pound | Actual Pounds Purchased and Used | |||
Cocoa | $4.70 | 176,700 | ||
Sugar | 0.55 | 230,300 | ||
Actual Labor Rate | Actual Labor Hours Used | |||
Dark chocolate | $13.10 per hr. | 1,170 | ||
Light chocolate | 13.90 per hr. | 5,660 |
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.
a. | Direct materials price variance | $fill in the blank 1 | FavorableUnfavorable |
Direct materials quantity variance | $fill in the blank 3 | FavorableUnfavorable | |
Total direct materials cost variance | $fill in the blank 5 | FavorableUnfavorable | |
b. | Direct labor rate variance | $fill in the blank 7 | FavorableUnfavorable |
Direct labor time variance | $fill in the blank 9 | FavorableUnfavorable | |
Total direct labor cost variance | $fill in the blank 11 | FavorableUnfavorable |
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