Flexible Budgeting and Variance Analysis I Love My Chocolate Company makes dark chocolate and light chocolate. Both prod

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Flexible Budgeting And Variance Analysis I Love My Chocolate Company Makes Dark Chocolate And Light Chocolate Both Prod 1 (44.02 KiB) Viewed 73 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 Dark Chocolate Light Chocolate Standard Price per Pound $7.25 Cocoa 12 lbs, 8 lbs. 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 in chocolate 15 on ner her fi
Actual Lahar 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. a. Direct materials price variance, direct materiais quantity variance, and total variance. b. Direct labor rate variance, direct labor time variance, and total variance. a. Direct materials price variance 13,399 X Unfavorable ✓ Direct materials quantity variance -122001 X Favorable ✓ Total direct materials cost variance s 1,199 Unfavorable b. Direct laborate variance -2,760 X Unfavorable Direct labor time varlance Favorable S 3,696 X Total direct labor cost variance 936 Unfavorable 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.