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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 10 lbs 7 lbs. Cocoa Sugar Standard labor time Standard Price per Pound $4.20 0.60 3 lbs 12 lbs. 0.3 hr. 0.4 hr. Dark Chocolate Light Chocolate Planned production 4,600 cases 12,400 cases Standard labor rate $13.50 per hr. $13.50 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) 4,400 12,900 Actual Price per Pound Actual Pounds Purchased and Used Cocoa $4.30 135,000 Sugar 0.55 185,300 Actual Labor Rate Actual Labor Hours Used Dark chocolate $13.00 per hr 1,200 Light chocolate 14.00 per hr 5,290 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 Actual Pounds Purchased and Used Actual Price per Pound $4.30 Cocoa 135,000 Sugar 0.55 185,300 Actual Labor Rate Actual Labor Hours Used Dark chocolate $13.00 per hr 1,200 Light chocolate 14.00 per hr 5,290 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. Direct materials price variance Favorable Direct materiais quantity variance Total direct materials cost variance b. Direct labor rate variance Direct labor time variance NHI Total direct labor cost variance 2. The variance analyses should be based on the amounts at volumes. The budget must flex with the volume cha the volume is different from the planned volume, as it was in this case, then the budget used for performance evaluation should reflect change in direct materials and direct labor that will be required for the production. In this way, spending from volume changes can be se from efficiency and price variances

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