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

Standard Amount Per Case

	Dark Chocolate	Light Chocolate	Standard price per pound
Cocoa	12 lbs	8 lbs	$7.25
Sugar	10 lbs	14 lbs	$1.40
Standard labor time	.50 hour	.60 hr

	Dark Chocolate	Light Chocolate
Planned Production	4,700 cases	11,000 cases
Standard Labor Rate	$15.50 per hour	$15.50 per hour

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)	5000	10000

	Actual price per Pound	Actual Pounds Purchased and Used
Cocoa	$7.25	140300
Sugar	$1.35	188000

	Actual Labor Rate	Actual Labor Hours Used
Dark Chocolate	$15.25 per hour	2360
Light Chocolate	$15.80 per hour	6120

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: 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, and total variance.

b. Direct labor rate variance, direct labor time variance, and total variance.

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 $__________