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.
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