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 11 lb. 8 lb. $4.3 Sugar 9 lb. 13 lb. 0.6 Standard labor time 0.4 hr. 0.5 hr. Dark Chocolate Light Chocolate Planned production 5,400 cases 11,000 cases Standard labor rate $13 per hr. $13 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) 5,100 11,400 Actual Price per Pound Actual Pounds Purchased and Used Cocoa $4.4 148,000 Sugar 0.55 189,200 Actual Labor Rate Actual Labor Hours Used Dark chocolate $12.6 per hr. 1,860 Light chocolate 13.4 per hr. 5,840 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: Direct materials price variance, direct materials quantity variance, and total variance. 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 $fill in the blank Direct materials quantity variance $fill in the blank Total direct materials cost variance $fill in the blank b. Direct labor rate variance $fill in the blank Direct labor time variance $fill in the blank Total direct labor cost variance $fill in the blank

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Topic Video

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	11 lb.		8 lb.	$4.3
Sugar	9 lb.		13 lb.	0.6
Standard labor time	0.4 hr.		0.5 hr.

	Dark Chocolate	Light Chocolate
Planned production	5,400 cases	11,000 cases
Standard labor rate	$13 per hr.	$13 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)	5,100	11,400
	Actual Price per Pound	Actual Pounds Purchased and Used
Cocoa	$4.4		148,000
Sugar	0.55		189,200
	Actual Labor Rate	Actual Labor Hours Used
Dark chocolate	$12.6 per hr.		1,860
Light chocolate	13.4 per hr.		5,840

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:

Direct materials price variance, direct materials quantity variance, and total variance.
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	$fill in the blank
	Direct materials quantity variance	$fill in the blank
	Total direct materials cost variance	$fill in the blank

b.	Direct labor rate variance	$fill in the blank
	Direct labor time variance	$fill in the blank
	Total direct labor cost variance	$fill in the blank

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions