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b. Direct labor rate variance Direct labor time variance Total direct labor cost variance %24 %24 %24

b. Direct labor rate variance Direct labor time variance Total direct labor cost variance %24 %24 %24

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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Actual Labor Rate Actual Labor Hours Used Dark chocolate $16.1 per hr. 1,890 Light chocolate 16.9 per hr. 6,460 Required: Prepare the following variance analyses for both chocolates and 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. Direct materials price variance $ -12,300 Favorable а. Direct materials quantity variance 8,530 Unfavorable Total direct materials cost variance -3,770 Favorable b. 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:Actual Labor Rate Actual Labor Hours Used Dark chocolate $16.1 per hr. 1,890 Light chocolate 16.9 per hr. 6,460 Required: Prepare the following variance analyses for both chocolates and 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. Direct materials price variance $ -12,300 Favorable а. Direct materials quantity variance 8,530 Unfavorable Total direct materials cost variance -3,770 Favorable b. 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.
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 Light Standard Price per Chocolate Chocolate Pound Сосoа 9 lb. 6 lb. $5.3 Sugar 7 lb. 11 lb. 0.6 Standard labor 0.4 hr. 0.5 hr. time Dark Chocolate Light Chocolate Planned production 5,500 cases 12,100 cases Standard labor rate $16.5 per hr. $16.5 per hr. I Love My Chocolate 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) 5,200 12,600 Actual Price per Pound Actual Pounds Purchased and Used Cocoa $5.4 123,000 Sugar 0.55 170,600 Actual Labor Rate Actual Labor Hours Used Dark chocolate $16.1 per hr. 1,890
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: Standard Amount per Case Dark Light Standard Price per Chocolate Chocolate Pound Сосoа 9 lb. 6 lb. $5.3 Sugar 7 lb. 11 lb. 0.6 Standard labor 0.4 hr. 0.5 hr. time Dark Chocolate Light Chocolate Planned production 5,500 cases 12,100 cases Standard labor rate $16.5 per hr. $16.5 per hr. I Love My Chocolate 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) 5,200 12,600 Actual Price per Pound Actual Pounds Purchased and Used Cocoa $5.4 123,000 Sugar 0.55 170,600 Actual Labor Rate Actual Labor Hours Used Dark chocolate $16.1 per hr. 1,890
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