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 $

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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

 

     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:

  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. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
  2. Direct materials price variance, direct materials quantity variance, and total variance.
  3. 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

$

   
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