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 12 lbs. 8 lbs. $7.25 Sugar 10 lbs. 14 lbs. 1.40 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 Company had the following actual results: Dark Chocolate Light Chocolate Actual production (cases) 5,000 10,000 Actual Price per Pound Actual Pounds Purchased and Used Cocoa $7.33 140,300 Sugar 1.35 188,000 Actual Labor Rate Actual Labor Hours Used Dark chocolate $15.25 per hr. 2,360 Light chocolate 15.80 per hr. 6,120 Required: 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. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct materials price variance, direct materials quantity variance, and total variance. Direct labor rate variance, direct labor time variance, and total variance. 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 $
Flexible
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:
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Standard Amount per Case |
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Dark Chocolate |
Light Chocolate |
Standard Price per Pound |
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Cocoa |
12 lbs. |
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8 lbs. |
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$7.25 |
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Sugar |
10 lbs. |
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14 lbs. |
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1.40 |
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Standard labor time |
0.50 hr. |
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0.60 hr. |
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Dark Chocolate |
Light Chocolate |
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Planned production |
4,700 cases |
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11,000 cases |
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Standard labor rate |
$15.50 per hr. |
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$15.50 per hr. |
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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:
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|
Dark Chocolate |
Light Chocolate |
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Actual production (cases) |
5,000 |
10,000 |
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Actual Price per Pound |
Actual Pounds Purchased and Used |
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Cocoa |
$7.33 |
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140,300 |
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|
Sugar |
1.35 |
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188,000 |
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Actual Labor Rate |
Actual Labor Hours Used |
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Dark chocolate |
$15.25 per hr. |
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2,360 |
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Light chocolate |
15.80 per hr. |
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6,120 |
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Required:
- 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. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
- Direct materials price variance, direct materials quantity variance, and total variance.
- Direct labor rate variance, direct labor time variance, and total variance.
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Direct materials price variance |
$ |
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Direct materials quantity variance |
$ |
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Total direct materials cost variance |
$ |
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Direct labor rate variance |
$ |
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Direct labor time variance |
$ |
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Total direct labor cost variance |
$ |
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