**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 lbs. | 6 lbs. | $4.40 || Sugar | 7 lbs. | 11 lbs. | 0.60 || Standard labor time | 0.3 hr. | 0.4 hr. | |**Dark Chocolate Light Chocolate**| | Dark Chocolate | Light Chocolate ||------------------------|----------------|-----------------|| Planned production | 4,300 cases | 11,200 cases || Standard labor rate | $15.00 per hr. | $15.00 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**| | Actual Production (cases) ||------------------------|---------------------------|| | 4,100 |**Light Chocolate**| | Actual Production (cases) ||------------------------|---------------------------|| | 11,600 |**Actual Price per Pound**| | Cocoa | Sugar ||--------|-------|-------|| | $4.50 | 0.55 || | Actual Pounds Purchased and Used ||------------------------|----------------------------------|| Cocoa | 107,000 || Sugar | 152,400 |**Actual Labor Rate and Hours Used**| | Actual Labor Rate | Actual Labor Hours Used ||------------------------|-------------------|-------------------------|| Dark chocolate | $14.60 per hr. | || | | 1,120 |This detailed breakdown helps in analyzing variances and understanding the efficiency of production processes in the company. ### Variance Analysis for Chocolate Production#### Given Data:- **Actual Labor Rate:** - Dark chocolate: $14.60 per hour - Light chocolate: $15.40 per hour- **Actual Labor Hours Used:** - Dark chocolate: 1,120 hours - Light chocolate: 4,760 hours#### Task:1. **Prepare Variance Analyses** for both types of chocolates as well as the total: - **Direct Materials Variance:** - Price Variance - Quantity Variance - Total Variance - **Direct Labor Variance:** - Rate Variance - Time Variance - Total Variance2. **Enter Variances:** - Favorable variances are entered as negative numbers (using a minus sign). - Unfavorable variances are entered as positive numbers.##### a. Direct Materials Cost Variance:- **Direct Materials Price Variance:** $5,350 (Unfavorable)- **Direct Materials Quantity Variance:** [Input Required]- **Total Direct Materials Cost Variance:** [Input Required]##### b. Direct Labor Cost Variance:- **Direct Labor Rate Variance:** [Input Required]- **Direct Labor Time Variance:** [Input Required]- **Total Direct Labor Cost Variance:** [Input Required]#### Notes:2. **Variance Analysis Conditions:** - Analysis should be based on the actual amounts at actual production volumes. - The budget should adjust for volume changes to accurately reflect performance.Enter the data accordingly to calculate any variances that reflect changes in efficiency, pricing, or production volume.

Name: **Flexible Budgeting and Variance Analysis**I Love My Chocolate Compa
Uploaded: 2024-03-20T06:33:06.000Z
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Description: **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**|

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Business

Accounting

Actual Labor Rate Actual Labor Hours Used Dark chocolate $14.60 per hr. 1,120 Light chocolate 15.40 per hr. 4,760 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. Direct materials price variance -5,350 x Unfavorable a. Direct materials quantity variance Total direct materials cost variance 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 volumes. The budget must flex with the volume changes. If the 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 materials and direct labor that will be required for the production. In this way, spending from volume changes can be separated from efficiency and price variances.

Actual Labor Rate Actual Labor Hours Used Dark chocolate $14.60 per hr. 1,120 Light chocolate 15.40 per hr. 4,760 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. Direct materials price variance -5,350 x Unfavorable a. Direct materials quantity variance Total direct materials cost variance 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 volumes. The budget must flex with the volume changes. If the 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 materials and direct labor that will be required for the production. In this way, spending from volume changes can be separated from efficiency and price variances.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Performance Eval Variances: Refer to the picture. Thanks!