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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 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

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