Flexible Budgeting And Variance Analysis I Love My Chocolate Company Makes Dark Chocolate And Light Chocolate Both Prod 1 (81.91 KiB) Viewed 45 times
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 Standard Price Dark Chocolate Light Chocolate per Pound Cocoa 12 lbs. 9 lbs. $4.50 10 lbs. 14 lbs. 0.60 Sugar Standard 0.4 hr. 0.5 hr. labor time Dark Light Chocolate Chocolate Planned production 5,700 cases 10,300 cases Standard labor $13.50 per hr. $13.50 per hr. rate 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 5,400 10,700 production (cases) Actual Price Actual Pounds per Pound Purchased and Used Cocoa $4.60 161,900 Sugar 0.55 198,700 Actual Labor Rate $13.20 per hr. Actual Labor Hours Used Dark chocolate 1,970 5,480 Light chocolate 13.80 per hr. 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.
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. a. Direct materials price variance $ Unfavorable Direct materials quantity variance $ Unfavorable Total direct materials cost variance Unfavorable Direct labor rate variance $ Unfavorable Direct labor time variance $ Favorable Unfavorable Total direct labor cost variance $ 2. The variance analyses should be based on the standard ✓amounts at actual ✓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 materials and direct labor that will be required for the actual ✔production. In this way, spending from volume changes can be separated from efficiency and price variances. b. ▼ ✓
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