Question

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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. 9 lbs. $4.70 Sugar 10 lbs. 14 lbs. 0.60 Standard labor time 0.4 hr. 0.5 hr. Dark Chocolate Light Chocolate Planned production 3,700 cases 13,300 cases $13.00 per hr. Standard labor rate $13.00 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 3,500 Actual Price per Pound Light Chocolate 13,800 Actual production (cases) Actual Pounds Purchased and Used Cocoa $4.80 Sugar 0.55 167,000 222,500 Actual Labor Hours Used Actual Labor Rate Dark chocolate 1,270 $12.60 per hr. 13.40 per hr. Light chocolate 7,070

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	$
	Direct materials quantity variance	$
	Total direct materials cost variance	$
b.	Direct labor rate variance	$
	Direct labor time variance	$
	Total direct labor cost variance	$

Answer 1

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a. Dined material Variance (proce) dt is the difference between budgeted pou'ce & actud pouce => Diered material prüce variance - | Actual - standard] x Actual (price price. I quantly S. NO Ingredient Material price variance Actual 1 standard Porce Price Ap-sp 4.80 4.70 10.1. 0.55 0.60 -0.05 actual 1 variance Quantity Cap-Sp]X AO. 167000 16700. 225000 - 11250 Cocoa Sugar. 5450 Therefore, Material price variance is $450 unfavourable.

Direct malesual quantity vaouance Dissed material [ Actual - standand 7x Standard quantity variance - l quantity quantity J Price. Variance. . Ingridient Actal quantity Standard Price Standard quantity 166800 288200 Cocoa 167000 4.70 0.60 3760 - 1920 Su909 2 R5000 variance is favourable 1 1840.(f) Ingridients Standard Calculation of standard_quantily Actual Standard quantitat Tr Standard Amount Amount per case Production / xadual produ] Total Dark light Dark I light 3500 13800 42000 124200 166800 3500 13800 35000 193800 828200 Dark Cocoa Sugar

Calailattom of disored material Cost vasuana. Direct malesual Disored material Disnec malesial Cost variance Price variance quantity variance, - 5450 (0) + 1840 Cf) = 3610 unfavourable. blabon rate variance Calculation of dired labog srate varvance. Direct Labor actual time - Standard rate] Actual rate variance (per hour hours . per hour Labour rate variano. Der hour [standand I actual I actual rale rate per hour hours AR-SR output Variance 13 1270 -0.40. Dark Choda| 12.60 te -508 7070 0.4 8888 [ 13.40 13 T light Choclate 23200) :: Disneck labog rate variance is 2320 unfavorable,

Calculation of Dired labon Time variance direct labon time vavance r adual dined - standard dinect x standand Time ( labor hours labon hours per hours. Actual Standard Standard AH-SH Variance output Dark hours rate hours 1270 1400 13 - 130 - 1690 Choclate light 7070 6900 13 10 8210 Choclate 520F Dinned labor time variance is 580 favourable. Cal adlation of standard hours output Actual I standards hours (stan labor x Actuapro) Production Standard labog Time 0.4 Dark 3500 1400 13800 6900 0.5 Calculation of dised labour Cost Variance Dined labour - Direct labon + Dinect labor rate variance Cost variance Time variance ! 2320 (0) + 5 R0 (f) 1800 (U)