Flexible Budgeting and Variance Analysis Belgian Chocolate Company makes dark ch
ID: 2424198 • Letter: F
Question
Flexible Budgeting and Variance Analysis
Belgian Chocolate Company makes dark chocolate and light chocolate. Both products require cocoa and sugar. The following planning information has been made available:
Belgian Chocolate does not expect there to be any beginning or ending inventories of cocoa or sugar. At the end of the budget year, Belgian Chocolate had the following actual results:
Required:
Prepare the following variance analyses for both chocolates and total, based on the actual results and production levels at the end of the budget year:
Direct materials price variance, direct materials quantity variance, and total variance.
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. If there is no variance, enter a zero.
Standard Amount per Case Dark Chocolate Light Chocolate Standard Price per Pound Cocoa 11 lbs. 8 lbs. $4.5 Sugar 9 lbs. 13 lbs. 0.6 Standard labor time 0.3 hr. 0.4 hr.Explanation / Answer
Answer a 1 : Direct Material Price Variance For COCA Direct Material Price Variance = ( A P *A Q)-( S P * A Q) '= (4.6*144100)-(4.50*144100) '=662860-648450 '= 14410 Unfavorable For Sugar Direct Material Price Variance = ( A P *A Q)-( S P* A Q) '= (0.55*194300)-(0.6*194300) '=106865-116580 '= 9715 Favorable Net Direct Material Price Variance = -14410+9715 '= $ 4695 Unfavorable Answer a 2 : Direct Material Quantity Variance For COCA Direct Material quantity Variance = ( S P* A Q) -( S P* S Q) '= (4.50*144100)-(4.50*143400) '=648450-645300 '= 3150 Unfavorable Calculation of standard quantity Standard Qty = Actual production * Std quantity Required Dark Chocolate '= 3800*11 '=41800 Light Chocolate '= 12700*8 '=101600 Total Standard Quantity Required '= 41800+101600 '=143400 For Sugar Direct Material quantity Variance = ( S P* A Q) -( S P* S Q) '= (0.60*194300)-(0.60*199300) '=116580-119580 '= 3000 favorable Calculation of standard quantity Standard Qty = Actual production * Std quantity Required Dark Chocolate '= 3800*9 '=34200 Light Chocolate '= 12700*13 '=165100 Total Standard Quantity Required '= 34200+165100 '=199300 Net Direct Material Quantity Variance = -3150+3000 '= $ 150 Unfavorable Answer a 3 : Total Direct cost Variance = Direct Material Price Variance +Direct Material Quantity Variance '= 4695+150 '= $ 4845 unfavorable Answer b 1: Direct Labor Rate Variance For Dark Chocolate Direct Labor Rate Variance = (AH*AR) -(AH*SR) '= (1040*13.5) – (1040*14) '= 14040-14560 ' = $ 520 Favorable For Light Chocolate Direct Labor Rate Variance = (AH*AR) -(AH*SR) '= (5210*14.5) – (5210*14) '= 75545-72940 ' = $ 2605 Unfavorable Net Direct labor rate variance = 520-2605 '= $ 2105 Unfavorable Answer b 2: Direct Labor Time Variance For Dark Chocolate Direct Labor Time Variance = (AH*SR)- (SH*SR) ' = (1040*14) - ( 1140 *14) '= 14560-15960 ' = 1400 Favorable Calculation of standard labor hour Standard Hour = Actual production * Std hour per unit '= 3800*0.3 '=1140 hour For Light Chocolate Direct Labor Time Variance = (AH*SR)- (SH*SR) ' = (5210*14) - ( 5080 *14) '= 72940-71120 ' = 1820 Unfavorable Calculation of standard labor hour Standard Hour = Actual production * Std hour per unit '= 12700*0.4 '=5080 hour Net Direct labor time variance = 1400-1820 '= $ 420 Unfavorable Answer b 3 : Total labor Cost Variance Total Direct cost Variance = Direct Labor Rate Variance+Direct labor Time Variance ' =2105+420 '= $ 2525 Unfavorable
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