Sharon’s Delights Chocolate Company makes dark chocolate and light chocolate. Both products require cocoa and sugar. The following planning information has been made available: Line Item Description Standard Amount per Case Dark Chocolate Standard Amount per Case Light Chocolate Standard Price per Pound Cocoa 10 lbs. 7 lbs. $4.20 Sugar 8 lbs. 12 lbs. 0.60 Standard labor time 0.3 hr. 0.4 hr. Line Item Description Dark Chocolate Light Chocolate Planned production 4,500 cases 12,800 cases Standard labor rate $14.00 per hr. $14.00 per hr. Sharon’s Delights Chocolate Company does not expect there to be any beginning or ending inventories of cocoa or sugar. At the end of the budget year, Sharon’s Delights Chocolate Company had the following actual results: Line Item Description Dark Chocolate Light Chocolate Actual production (cases) 4,300 13,300 Line Item Description Actual Price per Pound Actual Quantity Purchased and Used Cocoa $4.30 136,800 Sugar 0.55 189,200 Line Item Description Actual Labor Rate Actual Labor Hours Used Dark chocolate $13.50 per hr. 1,170 Light chocolate 14.50 per hr. 5,450 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. Line Item Description Amount variance Direct materials price variance $fill in the blank 1 Direct materials quantity variance $fill in the blank 3 Total direct materials cost variance $fill in the blank 5 Line Item Description Amount variance Direct labor rate variance $fill in the blank 7 Direct labor time variance $fill in the blank 9 Total direct labor cost variance $fill in the blank 11

Sharon’s Delights Chocolate Company makes dark chocolate and light chocolate. Both products require cocoa and sugar. The following planning information has been made available: Line Item Description Standard Amount per Case Dark Chocolate Standard Amount per Case Light Chocolate Standard Price per Pound Cocoa 10 lbs. 7 lbs. $4.20 Sugar 8 lbs. 12 lbs. 0.60 Standard labor time 0.3 hr. 0.4 hr. Line Item Description Dark Chocolate Light Chocolate Planned production 4,500 cases 12,800 cases Standard labor rate $14.00 per hr. $14.00 per hr. Sharon’s Delights Chocolate Company does not expect there to be any beginning or ending inventories of cocoa or sugar. At the end of the budget year, Sharon’s Delights Chocolate Company had the following actual results: Line Item Description Dark Chocolate Light Chocolate Actual production (cases) 4,300 13,300 Line Item Description Actual Price per Pound Actual Quantity Purchased and Used Cocoa $4.30 136,800 Sugar 0.55 189,200 Line Item Description Actual Labor Rate Actual Labor Hours Used Dark chocolate $13.50 per hr. 1,170 Light chocolate 14.50 per hr. 5,450 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. Line Item Description Amount variance Direct materials price variance $fill in the blank 1 Direct materials quantity variance $fill in the blank 3 Total direct materials cost variance $fill in the blank 5 Line Item Description Amount variance Direct labor rate variance $fill in the blank 7 Direct labor time variance $fill in the blank 9 Total direct labor cost variance $fill in the blank 11

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

Sharon’s Delights Chocolate Company makes dark chocolate and light chocolate. Both products require cocoa and sugar. The following planning information has been made available:

Line Item Description	Standard Amount per Case Dark Chocolate	Standard Amount per Case Light Chocolate	Standard Price per Pound
Cocoa	10 lbs.	7 lbs.	$4.20
Sugar	8 lbs.	12 lbs.	0.60
Standard labor time	0.3 hr.	0.4 hr.

Line Item Description	Dark Chocolate	Light Chocolate
Planned production	4,500 cases	12,800 cases
Standard labor rate	$14.00 per hr.	$14.00 per hr.

Sharon’s Delights Chocolate Company does not expect there to be any beginning or ending inventories of cocoa or sugar. At the end of the budget year, Sharon’s Delights Chocolate Company had the following actual results:

Line Item Description	Dark Chocolate	Light Chocolate
Actual production (cases)	4,300	13,300

Line Item Description	Actual Price per Pound	Actual Quantity Purchased and Used
Cocoa	$4.30	136,800
Sugar	0.55	189,200

Line Item Description	Actual Labor Rate	Actual Labor Hours Used
Dark chocolate	$13.50 per hr.	1,170
Light chocolate	14.50 per hr.	5,450

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.

Line Item Description	Amount	variance
Direct materials price variance	$fill in the blank 1
Direct materials quantity variance	$fill in the blank 3
Total direct materials cost variance	$fill in the blank 5

Line Item Description	Amount	variance
Direct labor rate variance	$fill in the blank 7
Direct labor time variance	$fill in the blank 9
Total direct labor cost variance	$fill in the blank 11

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.

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