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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 availabl Standard Amount per Case Light Chocolate 9 lbs. Cocoa Sugar Standard labor time Planned production Standard labor rate Actual production (cases) Cocoa Sugar Dark Chocolate Dark chocolate Light shocolate 12 lbs. 10 lbs. 0.3 hr. Dark Chocolate 5,500 cases $15.00 per hr. Dark Chocolate 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 Compa had the following actual results: 5,200 14 lbs. 0.4 hr. Actual Price per Pound $4.70 0.55 16 Actual Labor Rate $14.70 per hr. Standard Price per Pound $4.60 0.60 Light Chocolate 11,700 cases $15.00 per hr. Light Chocolate 12,200 Actual Pounds Purchased and Used 173,100 217,200 Actual Labor Hours Used 1,420 5.000

I Love My Chocolate Company makes dark chocolate and light chocolate. Both products require cocoa and sugar. The following planning information has been made availabl Standard Amount per Case Light Chocolate 9 lbs. Cocoa Sugar Standard labor time Planned production Standard labor rate Actual production (cases) Cocoa Sugar Dark Chocolate Dark chocolate Light shocolate 12 lbs. 10 lbs. 0.3 hr. Dark Chocolate 5,500 cases $15.00 per hr. Dark Chocolate 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 Compa had the following actual results: 5,200 14 lbs. 0.4 hr. Actual Price per Pound $4.70 0.55 16 Actual Labor Rate $14.70 per hr. Standard Price per Pound $4.60 0.60 Light Chocolate 11,700 cases $15.00 per hr. Light Chocolate 12,200 Actual Pounds Purchased and Used 173,100 217,200 Actual Labor Hours Used 1,420 5.000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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 Light Chocolate Cocoa Sugar Standard labor time Planned production Standard labor rate Actual production (cases) Cocoa Sugar Dark Chocolate 12 lbs. 10 lbs. Dark chocolate Light chocolate 0.3 hr. Dark Chocolate 5,500 cases $15.00 per hr. Dark Chocolate 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: 5,200 9 lbs. 14 lbs. Pound Actual Price per $4.70 0.55 0.4 hr. Actual Labor Rate $14.70 per hr. 15.30 per hr. Standard Price per Pound $4.60 0.60 Light Chocolate 11,700 cases $15.00 per hr. Light Chocolate 12,200 Actual Pounds Purchased and Used 173,100 217,200 Actual Labor Hours Used 1,420 5,000
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 Light Chocolate Cocoa Sugar Standard labor time Planned production Standard labor rate Actual production (cases) Cocoa Sugar Dark Chocolate 12 lbs. 10 lbs. Dark chocolate Light chocolate 0.3 hr. Dark Chocolate 5,500 cases $15.00 per hr. Dark Chocolate 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: 5,200 9 lbs. 14 lbs. Pound Actual Price per $4.70 0.55 0.4 hr. Actual Labor Rate $14.70 per hr. 15.30 per hr. Standard Price per Pound $4.60 0.60 Light Chocolate 11,700 cases $15.00 per hr. Light Chocolate 12,200 Actual Pounds Purchased and Used 173,100 217,200 Actual Labor Hours Used 1,420 5,000
Required: 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: 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. Unfavorable a. b. Direct materials price variance Direct materials quantity variance Total direct materials cost variance Direct labor rate variance Direct labor time variance Total direct labor cost variance $ $ Unfavorable Unfavorable Unfavorable Favorable Unfavorable ✔amounts at actual 2. The variance analyses should be based on the standard volumes. The budget must flex with the volume changes. If the actual ✔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 ✔production. In this way, spending from volume changes can be separated from efficiency and price materials and direct labor that will be required for the actual variances.
Transcribed Image Text:Required: 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: 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. Unfavorable a. b. Direct materials price variance Direct materials quantity variance Total direct materials cost variance Direct labor rate variance Direct labor time variance Total direct labor cost variance $ $ Unfavorable Unfavorable Unfavorable Favorable Unfavorable ✔amounts at actual 2. The variance analyses should be based on the standard volumes. The budget must flex with the volume changes. If the actual ✔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 ✔production. In this way, spending from volume changes can be separated from efficiency and price materials and direct labor that will be required for the actual variances.
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