Flexible Budgeting and Variance Analysis

Sharons Delights 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	Standard Amount per Case Light Chocolate	Standard Price per Pound
Cocoa	11 lb	8 lb	$4.20
Sugar	9 lb	13 lb	$0.60
StandardLabor	0.3 hr	0.4 hr

	Dark Chocolate	Light Chocolate
Planned production	3,800 cases	11,700 cases
Standard labor rate	$16.50 per hr.	$16.50 per hr.

Sharons Delights Chocolate Company does not expect there to be any beginning or ending inventories of cocoa or sugar. At the end of the budget year, Sharons Delights Chocolate Company had the following actual results:

	Dark Chocolate	Light Chocolate
Actual production (cases)	3,600	12,200

	Actual Price per Pound	Actual Quantity Purchased and Used
Cocoa	$4.30	137,900
Sugar	$.55	186,200

	Actual Labor Rate	Actual Labor Hours Used
Dark chocolate	$16.00 per hr.	980
Ligh chocolate	17.00 per hr.	5,000

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.

Line Item Description	Amount	variance
Direct materials price variance	$	Favorable/Unfavorable
Direct materials quantity variance	$	Favorable/Unfavorable
Total direct materials cost variance	$	Favorable/Unfavorable

b.

Line Item Description	Amount	variance
Direct labor rate variance	$	Favorable/Unfavorable
Direct labor time variance	$	Favorable/Unfavorable
Total direct labor cost variance	$	Favorable/Unfavorable