Question

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
	Dark Chocolate		Light Chocolate		Standard Price per Pound
Cocoa	10 lbs.		7 lbs.		$4.40
Sugar	8 lbs.		12 lbs.		0.60
Standard labor time	0.3 hr.		0.4 hr.

	Dark Chocolate		Light Chocolate
Planned production	3,700 cases		13,700 cases
Standard labor rate	$13.50 per hr.		$13.50 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 (cases)	3,500		14,200
	Actual Price per Pound		Actual Pounds Purchased and Used
Cocoa	$4.50		135,100
Sugar	0.55		193,400
	Actual Labor Rate		Actual Labor Hours Used
Dark chocolate	$13.20 per hr.		960
Light chocolate	13.80 per hr.		5,820

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. If there is no variance, enter a zero.

a.	Direct materials price variance	$
	Direct materials quantity variance	$
	Total direct materials cost variance	$
b.	Direct labor rate variance	$
	Direct labor time variance	$
	Total direct labor cost variance	$

Answer 1

Dirut Material barice Vanianie - (Standard prue - Actual price) Actual Quantity Cocoa i ( 404 - 4:5) 135100 3 1135701 Underwony Sugar i 10.6 - 0.55) 193400 3-9670( favouras __ Toral material price Varianu $2840 (0) Direct Material Quantity Vauanles 1 Standard Quantity Actual Quantity) Standard for actual output Cocoa - (0x2500 + ZX 14200) – 135100] 4.4 Dark Chocolate Light Chocolate (134400 - 135100) 24.4 - +3080(0) Sugar i ( (83500 + 12x14200) – 193400] 0-6_ = ( 1984400 – 193400).0.6 = - 3000 (E) $80(0)

Material cost Vavanie Cocoa é (SRXSQ) – (AR XAQ) 192x142) [ 4.4x134400) - (4.5*135100) = +1659010) 2 502 Sugar: (0.6 x 198400) - 10.55 x 193400) = -12670 (E) Couc xasca - last Moderno # 3920 (4) Labour Rate Vamante Draina (SR - AR) AH. online Darch Chocolate ( 13.5 - 13.2) 960 = - 288 (E) light chocolate ė (13.5 - 13.8) 5820 = +1746 (1) Total Labour Rate Variance. & 1458 (0) Labour efficiency Variance (SH-AH) SR. Dark : [0.3 x 3500) – 960] 13.5 Chocolate =1215(E) Light :: 10.4 x 184200) - 5820] 13.5 =+189040) chocolate - Labour efficiency variance $ 675(0).

Labour_cost_varianu - (SHXSR) - (AH XARDAS Darkast (0:3x 3500) X 13:5] - 960x.13.27 Suusata1503E) Lights (604 x 14200) X 13.5)) – (5820x 13.8) chocolate 5 +3636 (0) Total Labour Cost Variance $ 2133 [0). RESSO (13.2 Sahl & sasino - so slot wadol logo CH JETO0o) - 2850. Bet I arahn e poporce of t

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