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:

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:

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, 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. If there is no variance, enter a zero.

Standard Amount per Case      Dark Chocolate      Light Chocolate      Standard Price per Pound Cocoa 12 lbs. 9 lbs. $4.40 Sugar 10 lbs. 14 lbs. 0.60 Standard labor time 0.3 hr. 0.4 hr.

Explanation / Answer

a.

Working:

b.

Working:

Total Material Variance 6830 Unfavourable    Made up of : Material Price Variance 6470 Unfavourable Material Quantity Variance 360 Unfavourable

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