Flexible budgeting and variance analysls PR 22-2A I Love My Chocolate Company makes dark chocolate and light chocolate. Both require cocoa and sugar. The following planning information has been made available: Standard Amount per Case Dark Chocolate Light Chocolate Standard Price per Pound 12 Ibs. 8 lbs. $7.25 Cocoa 1.40 10 Ibs. 14 lbs. Sugar Standard labor time 0.50 hr. 0.60 hr. Dark Chocolate Light Chocolate Planned production 4,700 cases 11,000 cases Standard labor rate $15.50 per hr. $15.50 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 Com pany had the following actual results:orlsiew Dark Chocolate Light Chocolate Actual production (cases) 5,000 10,000 Actual Price per Pound Actual Pounds Purchased and Used Сосоа $7.33 140,300 Sugar 1.35 188,000 Actual Labor Rate Actual Labor Hours Used Dark chocolate $15.25 per hr. 15.80 per hr. 2,360 Light chocolate 6,120 Instructions 1. Prepare the following variance analyses for both chocolates and the total, based o the actual results and production levels at the end of the budget year: a. Direct materials price, quantity, and total variance. b. Direct labor rate, time, and total variance. 2. Why are the standard amounts in part (1) based on the actual production fc the year instead of the planned production for the year?
Flexible budgeting and variance analysls PR 22-2A I Love My Chocolate Company makes dark chocolate and light chocolate. Both require cocoa and sugar. The following planning information has been made available: Standard Amount per Case Dark Chocolate Light Chocolate Standard Price per Pound 12 Ibs. 8 lbs. $7.25 Cocoa 1.40 10 Ibs. 14 lbs. Sugar Standard labor time 0.50 hr. 0.60 hr. Dark Chocolate Light Chocolate Planned production 4,700 cases 11,000 cases Standard labor rate $15.50 per hr. $15.50 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 Com pany had the following actual results:orlsiew Dark Chocolate Light Chocolate Actual production (cases) 5,000 10,000 Actual Price per Pound Actual Pounds Purchased and Used Сосоа $7.33 140,300 Sugar 1.35 188,000 Actual Labor Rate Actual Labor Hours Used Dark chocolate $15.25 per hr. 15.80 per hr. 2,360 Light chocolate 6,120 Instructions 1. Prepare the following variance analyses for both chocolates and the total, based o the actual results and production levels at the end of the budget year: a. Direct materials price, quantity, and total variance. b. Direct labor rate, time, and total variance. 2. Why are the standard amounts in part (1) based on the actual production fc the year instead of the planned production for the year?
Chapter1: Financial Statements And Business Decisions
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A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
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**PR 22-2A 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** | **Standard Price per Pound** |
|---------------------|------------------------------|------------------------------|
| | **Dark Chocolate** | **Light Chocolate** | **$7.25 (Cocoa)** / **$1.40 (Sugar)** |
| **Cocoa** | 12 lbs. | 8 lbs. | $7.25 |
| **Sugar** | 10 lbs. | 14 lbs. | $1.40 |
| **Standard labor time** | 0.50 hr. | 0.60 hr. | |
### Dark Chocolate
- **Planned production**: 4,700 cases
- **Standard labor rate**: $15.50 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)** | 5,000 | 10,000 |
| **Actual Price per Pound** | | |
| **Cocoa** | $7.33 | |
| **Sugar** | $1.35 | |
| **Actual Pounds Purchased and Used** | | |
| **Cocoa** | 140,300 | |
| **Sugar** | 188,000 | |
| **Actual Labor Rate** | | |
| **Dark chocolate** | $15.25 per hr. | |
| **Light chocolate** | $15.80 per hr. | |
| **Actual Labor Hours Used** | 2,360 | 6,120 |
---
### Instructions
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:**
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