PR$\mathrm{.}23\mathrm{.}02$A$.$ALGO $($Algorithmic$)$

Flexibie Budgeting and Varisnce Analysis

Sharon's Delights Chocolate Company makes dark chocolste and light chocolste. Both products require cocos and sugar. The following planning information has been made available:

Dark Chocolate Light Chocolate

Planned production $4,200$ cases $13,800$ cases

Standard labor rate $$16\mathrm{.}00$ per hr$.$ $$16\mathrm{.}00$ per hr$.$

Dark Chocolate Light Chocolate

Actual production $($coses$)$

$4,000$

$14,400$

Actual Price per Pound

Actual Quantity Purchased and Used

Required:

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 uaing a minus sign and an unfavorabie variance as a positive number.

a$.$

Direct materials price variance &

Direct moterials quantity variance $

Total direct materials cost variance $

b$.$

Direct labor rate variance $

Direct labor time varlance $

Total direct labor cost variance $

The variance analyses should be bosed on the

; amounts at

volumes. The budget must flex with the volume changes. If the

: volume is different from the planned volume, as

It was in this case, then the budget used for performance evaluation should reflect the change in direct materisls and direct labor that will be required for the

: production. In this way, spending from volume changes an

be separated from efficlency and price variances.