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:

Line Item DescriptionStandard Amount per Case Dark ChocolateStandard Amount per Case Light ChocolateStandard Price per PoundCocoa11 lbs.8 lbs.$5.10Sugar9 lbs.13 lbs.0.60Standard labor time0.3 hr.0.4 hr.

Line Item DescriptionDark ChocolateLight ChocolatePlanned production5,800 cases12,600 casesStandard labor rate$15.00 per hr.$15.00 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:

Line Item DescriptionDark ChocolateLight ChocolateActual production (cases)5,50013,100

Line Item DescriptionActual Price per PoundActual Quantity Purchased and UsedCocoa$5.20166,100Sugar0.55214,300

Line Item DescriptionActual Labor RateActual Labor Hours UsedDark chocolate$14.70 per hr.1,500Light chocolate15.30 per hr.5,370

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.

Line Item DescriptionAmountvarianceDirect materials price variance$fill in the blank 1FavorableUnfavorableUnfavorableDirect materials quantity variance$fill in the blank 3FavorableUnfavorableUnfavorableTotal direct materials cost variance$fill in the blank 5FavorableUnfavorableUnfavorableLine Item DescriptionAmountvarianceDirect labor rate variance$fill in the blank 7FavorableUnfavorableUnfavorableDirect labor time variance$fill in the blank 9FavorableUnfavorableFavorableTotal direct labor cost variance$fill in the blank 11FavorableUnfavorableUnfavorable