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. 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. a. Direct materials price variance b. Direct materials quantity variance Total direct materials cost variance Direct labor rate variance Direct labor time variance 00

. 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. a. Direct materials price variance b. Direct materials quantity variance Total direct materials cost variance Direct labor rate variance Direct labor time variance 00

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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: Cocoa Sugar Standard labor time Planned production Standard labor rate Actual production (cases) Cocoa Standard Amount per Case Light Chocolate 9 lbs. Dark Chocolate Sugar 12 lbs. 10 lbs. 0.3 hr. Dark Chocolate Light Chocolate 4,500 cases 13,100 cases $16.00 per hr. $16.00 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 4,300 Actual Price per Pound $4.80 14 lbs. 0.55 Ashumt-LA- DILA 0.4 hr. Standard Price per Pound $4.70 0.60 Light Chocolate 13,600 Actual Pounds Purchased and Used 174,900 227,600 ALLTILI LA U... PlanL
Transcribed Image Text: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: Cocoa Sugar Standard labor time Planned production Standard labor rate Actual production (cases) Cocoa Standard Amount per Case Light Chocolate 9 lbs. Dark Chocolate Sugar 12 lbs. 10 lbs. 0.3 hr. Dark Chocolate Light Chocolate 4,500 cases 13,100 cases $16.00 per hr. $16.00 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 4,300 Actual Price per Pound $4.80 14 lbs. 0.55 Ashumt-LA- DILA 0.4 hr. Standard Price per Pound $4.70 0.60 Light Chocolate 13,600 Actual Pounds Purchased and Used 174,900 227,600 ALLTILI LA U... PlanL
Dark chocolate Light chocolate Required: Actual Labor Rate $15.50 per hr. 16.50 per hr. b. 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. a. Direct materials price variance Direct materials quantity variance Total direct materials cost variance Actual Labor Hours Used 1,170 5,580 000 000 Direct labor rate variance Direct labor time variance Total direct labor cost variance 2. The variance analyses should be based 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 materials and direct labor that will be required for the production. In this way, spending from volume changes can be separated from efficiency and price variances.
Transcribed Image Text:Dark chocolate Light chocolate Required: Actual Labor Rate $15.50 per hr. 16.50 per hr. b. 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. a. Direct materials price variance Direct materials quantity variance Total direct materials cost variance Actual Labor Hours Used 1,170 5,580 000 000 Direct labor rate variance Direct labor time variance Total direct labor cost variance 2. The variance analyses should be based 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 materials and direct labor that will be required for the production. In this way, spending from volume changes can be separated from efficiency and price variances.
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