Reference no: EM13527660
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:
| Standard Amount per Case |
|
Dark Chocolate |
Light Chocolate |
Standard Price per Pound |
| Cocoa |
11 lbs. |
|
8 lbs. |
|
$5.40 |
|
| Sugar |
9 lbs. |
|
13 lbs. |
|
0.60 |
|
| Standard labor time |
0.50 hr. |
|
0.60 hr. |
|
|
|
|
Dark Chocolate |
Light Chocolate |
| Planned production |
5,400 cases |
|
10,100 cases |
|
| Standard labor rate |
$13.50 per hr. |
|
$13.50 per hr. |
|
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:
|
Dark Chocolate |
Light Chocolate |
| Actual production (cases) |
5,100 |
10,500 |
|
Actual Price per Pound |
Actual Pounds Purchased and Used |
| Cocoa |
$5.50 |
|
140,800 |
|
| Sugar |
0.55 |
|
177,800 |
|
|
Actual Labor Rate |
Actual Labor Hours Used |
| Dark chocolate |
$13.00 per hr. |
|
2,320 |
|
| Light chocolate |
14.00 per hr. |
|
6,460 |
|
Required:
1. 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.
| 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: |
$
|
Here is the information given to help from the assignment; I just can't seem to figure out how to do it! Check My Work Feedback a. Price variance is the difference between the actual and standard prices, multiplied by the actual quantity. Quantity variance is the difference between the actual and standard quantities, multiplied by the standard price. Total variance is the price variance plus the quantity variance, considering their identifications as favorable or unfavorable.
b. Labor rate variance is the difference between the actual and standard hourly rates, multiplied by the actual hours. Time variance is the difference between the actual and standard hours, multiplied by the standard rate per hour. Total variance is the rate variance plus the time variance, considering their identifications as favorable or unfavorable.
c. Review how actual production is analyzed by using standard amounts.