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. | $4.50 | |||
Sugar | 10 lbs. | 14 lbs. | 0.60 | |||
Standard labor time | 0.4 hr. | 0.5 hr. |
Dark Chocolate | Light Chocolate | |||
Planned production | 5,500 cases | 12,000 cases | ||
Standard labor rate | $13.00 per hr. | $13.00 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:
Dark Chocolate | Light Chocolate | |||
Actual production (cases) | 5,200 | 12,500 | ||
Actual Price per Pound | Actual Pounds Purchased and Used | |||
Cocoa | $4.60 | 175,800 | ||
Sugar | 0.55 | 221,300 | ||
Actual Labor Rate | Actual Labor Hours Used | |||
Dark chocolate | $12.50 per hr. | 1,890 | ||
Light chocolate | 13.50 per hr. | 6,410 |
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 | FavorableUnfavorable | |
Direct materials quantity variance | FavorableUnfavorable | ||
Total direct materials cost variance | FavorableUnfavorable | ||
b. | Direct labor rate variance | FavorableUnfavorable | |
Direct labor time variance | FavorableUnfavorable | ||
Total direct labor cost variance | FavorableUnfavorable |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started