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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 Price per Dark Light Chocolate Chocolate Pound 10 lbs. 7 lbs. Cocoa $4.60 8 lbs. 12 lbs. 0.60 Sugar Standard labor 0.4 hr. 0.5 hr time Dark Chocolate Light Chocolate Planned production 3,900 cases 11,700 cases Standard labor rate $14.00 per hr. $14.00 per hr. 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 3,700 12,200 (cases) Actual Pounds Purchased Actual Price per Pound and Used Cocoa $4.70 123,000 Sugar 0.55 171,600 171,600 Sugar 0.55 Actual Labor Rate Actual Labor Hours Used Dark chocolate $13.70 per hr. 1,350 Light chocolate 14.30 per hr. 6,250 Required: 1. Prepare the following variance analyses for both chocolates and the total, based on the actual results and production levels at the end F 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 positive number. If there s no variance, enter a zero. Unfavorable Direct materials price variance -3,720 X a. Unfavorable Direct materials quantity variance Unfavorable Total direct materials cost variance b. Unfavorable Direct labor rate variance Unfavorable Direct labor time variance Unfavorable Total direct labor cost variance 2. The variance analyses should be based on the volume is different from the volumes. The budget must flex with the volume changes. If the amounts at production, In this way, planned volume, as it was in this case, then the budget used for performance evaluation should reflect the change in direct materials and direct labor that will be required for the spending from volume changes can b separated from efficiency and price variances. Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis Mackinaw Inc, processes a base chemical into plastic.. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 74.000 units product were as follows: Standard Costs Actual Costs Direct materials 222,000 lbs. at $4.90 219,800 lbs. at $4.70 Direct labor 18,500 hrs. at $16.30 18,930 hrs. at $16.50 Factory overhead Rates per direct labor hr. , based on 100% normal capacity of 19,310 direct labor hrs.: $69,600 variable cost Variable cost, $3.80 Fixed cost, $6.00 $115,860 fixed cost Each unit requires 0.25 hour of direct labor. Required: a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct Material Price Variance Direct Materials Quantity Variance Total Direct Materials Cost Variance b. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct Labor Rate Variance $ Direct Labor Time Variance Total Direct Labor Cost Variance c. Determine variable factory overhead controllable variance, the fixed factory overhead volume variance, and total factory overhead cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance s a positive number. Variable factory overhead controllable variance Fixed factory overhead volume variance Total factory overhead cost variance 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 Price per Dark Light Chocolate Chocolate Pound 10 lbs. 7 lbs. Cocoa $4.60 8 lbs. 12 lbs. 0.60 Sugar Standard labor 0.4 hr. 0.5 hr time Dark Chocolate Light Chocolate Planned production 3,900 cases 11,700 cases Standard labor rate $14.00 per hr. $14.00 per hr. 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 3,700 12,200 (cases) Actual Pounds Purchased Actual Price per Pound and Used Cocoa $4.70 123,000 Sugar 0.55 171,600 171,600 Sugar 0.55 Actual Labor Rate Actual Labor Hours Used Dark chocolate $13.70 per hr. 1,350 Light chocolate 14.30 per hr. 6,250 Required: 1. Prepare the following variance analyses for both chocolates and the total, based on the actual results and production levels at the end F 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 positive number. If there s no variance, enter a zero. Unfavorable Direct materials price variance -3,720 X a. Unfavorable Direct materials quantity variance Unfavorable Total direct materials cost variance b. Unfavorable Direct labor rate variance Unfavorable Direct labor time variance Unfavorable Total direct labor cost variance 2. The variance analyses should be based on the volume is different from the volumes. The budget must flex with the volume changes. If the amounts at production, In this way, planned volume, as it was in this case, then the budget used for performance evaluation should reflect the change in direct materials and direct labor that will be required for the spending from volume changes can b separated from efficiency and price variances. Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis Mackinaw Inc, processes a base chemical into plastic.. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 74.000 units product were as follows: Standard Costs Actual Costs Direct materials 222,000 lbs. at $4.90 219,800 lbs. at $4.70 Direct labor 18,500 hrs. at $16.30 18,930 hrs. at $16.50 Factory overhead Rates per direct labor hr. , based on 100% normal capacity of 19,310 direct labor hrs.: $69,600 variable cost Variable cost, $3.80 Fixed cost, $6.00 $115,860 fixed cost Each unit requires 0.25 hour of direct labor. Required: a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct Material Price Variance Direct Materials Quantity Variance Total Direct Materials Cost Variance b. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct Labor Rate Variance $ Direct Labor Time Variance Total Direct Labor Cost Variance c. Determine variable factory overhead controllable variance, the fixed factory overhead volume variance, and total factory overhead cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance s a positive number. Variable factory overhead controllable variance Fixed factory overhead volume variance Total factory overhead cost variance
