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
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 Description | Standard Amount per Case Dark Chocolate | Standard Amount per Case Light Chocolate | Standard Price per Pound |
|---|---|---|---|
| Cocoa | 8 lbs. | 6 lbs. | $4.75 |
| Sugar | 5 lbs. | 4 lbs. | 1.20 |
| Standard labor time | 0.50 hr. | 0.60 hr. |
| Line Item Description | Dark Chocolate | Light Chocolate |
|---|---|---|
| Planned production | 4,000 cases | 7,500 cases |
| Standard labor rate | $15.50 per hr. | $15.50 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:
| Line Item Description | Dark Chocolate | Light Chocolate |
|---|---|---|
| Actual production (cases) | 4,500 | 8,000 |
| Line Item Description | Actual Price per Pound | Actual Quantity Purchased and Used |
|---|---|---|
| Cocoa | $4.90 | 85,000 |
| Sugar | 1.24 | 53,000 |
| Line Item Description | Actual Labor Rate | Actual Labor Hours Used |
|---|---|---|
| Dark chocolate | $15.25 per hr. | 2,200 |
| Light chocolate | 15.80 per hr. | 4,400 |
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. 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.
| Line Item Description | Amount | variance |
|---|---|---|
| Direct materials price variance | $ | Favorable or Unfavorable |
| Direct materials quantity variance | $ | Favorable or Unfavorable |
| Total direct materials cost variance | $ | Favorable or Unfavorable |
| Line Item Description | Amount | variance |
|---|---|---|
| Direct labor rate variance | $ | Favorable or Unfavorable |
| Direct labor time variance | $ | Favorable or Unfavorable |
| Total direct labor cost variance | $ | Favorable or Unfavorable |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Lets go through the variance analyses stepbystep 1 Direct Materials Price Variance and Quantity Variance a Cocoa Price Variance Formula textPrice Vari...
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Step: 2
Step: 3
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Authors: Danaë Metaxa, Joon Sung Park, Ronald E Robertson, Karrie Karahalios, Christo Wilson, Jeff Hancock, Christian Sandvig
1st Edition
1680839160, 978-1680839166
