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. Sugar 7 lb. 11 lb. $5.2 0.6 Standard labor 0.4 hr. 0.5 hr. time Planned production Standard labor rate Dark Chocolate Light Chocolate 4,200 cases $16.5 per hr. 10,000 cases $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) 4,000 10,400 Actual Price per Pound Actual Pounds Purchased and Used Cocoa Sugar $5.3 0.55 98,900 138,800 Actual Labor Rate Actual Labor Hours Used Dark chocolate $16.2 per hr. 16.8 per hr. 1,460 5,330 Light chocolate 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 price variance Direct materials quantity variance Total direct materials cost variance 2,950 ✔ Unfavorable 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 performance evaluation should reflect the change in direct materials and direct labor that will be required for the volumes. The budget must flex with the volume changes. If the, volume is different from the planned volume, as it was in this case production. In this way, spending from volume changes can be separated from efficiency and price variances. Ревсовок ▼ Check My Work Unfavorable variances can be thought of as increasing costs (a debit). Favorable variances can be thought of as decreasing costs (a credit).

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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.
Sugar
7 lb.
11 lb.
$5.2
0.6
Standard labor
0.4 hr.
0.5 hr.
time
Planned production
Standard labor rate
Dark Chocolate
Light Chocolate
4,200 cases
$16.5 per hr.
10,000 cases
$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)
4,000
10,400
Actual Price per Pound Actual Pounds Purchased and Used
Cocoa
Sugar
$5.3
0.55
98,900
138,800
Actual Labor Rate
Actual Labor Hours Used
Dark chocolate
$16.2 per hr.
16.8 per hr.
1,460
5,330
Light chocolate
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 price variance
Direct materials quantity variance
Total direct materials cost variance
2,950 ✔
Unfavorable
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
performance evaluation should reflect the change in direct materials and direct labor that will be required for the
volumes. The budget must flex with the volume changes. If the,
volume is different from the planned volume, as it was in this case
production. In this way, spending from volume changes can be separated from efficiency and price variances.
Ревсовок
▼ Check My Work
Unfavorable variances can be thought of as increasing costs (a debit). Favorable variances can be thought of as decreasing costs (a credit).
Transcribed Image Text: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. Sugar 7 lb. 11 lb. $5.2 0.6 Standard labor 0.4 hr. 0.5 hr. time Planned production Standard labor rate Dark Chocolate Light Chocolate 4,200 cases $16.5 per hr. 10,000 cases $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) 4,000 10,400 Actual Price per Pound Actual Pounds Purchased and Used Cocoa Sugar $5.3 0.55 98,900 138,800 Actual Labor Rate Actual Labor Hours Used Dark chocolate $16.2 per hr. 16.8 per hr. 1,460 5,330 Light chocolate 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 price variance Direct materials quantity variance Total direct materials cost variance 2,950 ✔ Unfavorable 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 performance evaluation should reflect the change in direct materials and direct labor that will be required for the volumes. The budget must flex with the volume changes. If the, volume is different from the planned volume, as it was in this case production. In this way, spending from volume changes can be separated from efficiency and price variances. Ревсовок ▼ Check My Work Unfavorable variances can be thought of as increasing costs (a debit). Favorable variances can be thought of as decreasing costs (a credit).
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