Flexible Budgeting and Variance Analysis I Love My Chocolate Company makes dark

Question

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 Light Standard Price per Chocolate 11 lbs. 9 lbs Chocolate Pound 8 lbs Cocoa Sugar Standard labor time $4.50 13 lbs 0.60 0.3 hr 0.4 hr Dark Chocolate 4,400 cases $13.50 per hr Light Chocolate 9,800 cases $13.50 per hr. Planned production Standard labor 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

Explanation / Answer

Solution INFORMATION TABLE (dark =4200 and light=10200 ) Standard Actual Material Material Calculation of Cocoa Standard Qty Rate Cost Qty Rate Cost Chocolate Units Qty per unit Total STd cocoa 127800 4.5 575100 128400 4.6 590640 Dark 4200 11 46200 suger 170400 0.6 102240 166100 0.55 91355 light 10200 8 81600 677340 681995 127800 Standard Actual Calculation of SUGr Standard Labour Labour Chocolate Units Qty per unit Total STd Hours Rate Cost Hours Rate Cost Dark 4200 9 37800 Dark 1260 13.5 17010 1150 13.2 15180 light 10200 13 132600 Light 4080 13.5 55080 4180 13.8 57684 170400 72090 72864 1 Material Price Variance (Std Rate - Actual Rate)*Actual Qty Cocoa (4.5-4.6)*128400 -12840 Suger (0.6-0.55)*166100 8305 total -4535 unfavorable 2 Material Qty Variance (Std Qty- Actual Qty)* Std Rate Cocoa (127800-128400)*4.5 -2700 Suger (0.6-0.55)*166100 2580 total -120 unfavorable 3 Material cost variance= total std cost-total actual cost 677340-681995 -4655 unfavorable 4 Labour Rate Variance (Std Rate - Actual Rate)* Actual hours Dark (13.5-13.2)*1150 345 Light (13.5-13.8)*4180 -1254 total -909 unfavourable 5 Labour Efficiency Variance (Std Hours - actual hours)*Std Rate Dark (1260-1150)*13.5 1485 Light (4080-4180)*13.5 -1350 total 135 favourable 6 Labour cost variance Standard cost -actual cost (72090-72864) -774

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