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 Cocoa 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
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 Cocoa 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. $16.5 per hr. I Love My Chocolate does not expect there to be any beginning or ending inventories of cocoa or sugar. At the end of the budget year, I Love My Chocolate Company had the following actual results: Dark Chocolate Light Chocolate Actual production (cases) 5,200 12,600 Actual Price per Pound Actual Pounds Purchased and Used
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please review part A. It isn't correct
Transcribed Image Text:### Variance Analysis for Direct Materials
**Required:**
Prepare the following variance analyses for both chocolates and total, based on the actual results and production levels at the end of the budget year:
a. **Direct materials price variance, direct materials quantity variance, and total variance.**
b. **Direct labor rate variance, direct labor time variance, and total variance.**
Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. If there is no variance, enter a zero.
#### a. Direct Materials Variance Analysis
- **Direct materials price variance:**
- Amount: **$ -4,760**
- Category: **Favorable**
- **Direct materials quantity variance:**
- Amount: **$ 8,530**
- Category: **Unfavorable**
- **Total direct materials cost variance:**
- Amount: **$ -3,770**
- Category: **Unfavorable**
These variances highlight the differences between the expected and actual costs related to direct materials used in production. A favorable variance indicates cost savings, whereas an unfavorable variance suggests higher costs than anticipated.
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 Chocolate | Light Chocolate | Standard Price per Pound |
|----------------------|----------------|-----------------|--------------------------|
| Cocoa | 9 lb. | 6 lb. | $5.3 |
| Sugar | 7 lb. | 11 lb. | $0.6 |
| Standard labor time | 0.4 hr. | 0.5 hr. | |
### Production and Labor Data
**Dark Chocolate:**
- Planned production: 5,500 cases
- Standard labor rate: $16.5 per hr.
**Light Chocolate:**
- Planned production: 12,100 cases
- Standard labor rate: $16.5 per hr.
I Love My Chocolate does not expect any beginning or ending inventories of cocoa or sugar. At the end of the budget year, I Love My Chocolate Company reported the following actual results:
### Actual Results
| | Dark Chocolate | Light Chocolate |
|--------------------------|----------------|-----------------|
| Actual production (cases)| 5,200 | 12,600 |
#### Actual Price per Pound & Actual Pounds Purchased and Used
| Component | Dark Chocolate | Light Chocolate |
|-----------|----------------|-----------------|
| **Cocoa** | $5.4 | 123,000 lb. |
| **Sugar** | $0.55 | 170,600 lb. |
#### Actual Labor Rate & Actual Labor Hours Used
| | Dark Chocolate | Light Chocolate |
|--------------------------|---------------------|-----------------|
| **Actual Labor Rate** | $16.1 per hr. | |
| **Actual Labor Hours Used** | 1,890 hours | |
This information outlines the variance in costs and production, emphasizing the differences between planned and actual outcomes for cocoa, sugar, and labor in chocolate production.
Expert Solution
Step 1 Introduction
Direct material price variance = (SP - AP) * AQ
Direct Material quantity variance = (SQ - AQ) * SP
Step by step
Solved in 2 steps
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.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education