Phillis€™ Chocolate Company makes dark chocolate and light chocolate. Both products require cocoa and sugar. The following planning information has been made available:

Phillis€™ Chocolate does not expect there to be any beginning or ending inventories of cocoa or sugar.
At the end of the budget year, Phillis€™ Chocolate had the following actual results:

Instructions
1. Prepare the following variance analyses, based on the actual results and production levels at the end of the budget year:
a. Direct materials price, quantity, and total variance.
b. Direct labor rate, time, and total variance.
2. Why are the standard amounts in (1) based on the actual production for the year instead of the planned production for theyear?

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Standard Quantity Cocoa Sugar Standard labor time 0.25 hr. Planned production Standard labor rate 16.20 per hour 16.15 per hour Dark Chocolate 12 lbs 10 lbs Light Chocolate 8 lbs 16 lbs. 0.40 hr 4,400 cases Standard Price per Pound $8.00 $1.50 3,400 cases Dark Chocolate 3,000 Actual Price per Pound $7.75 Light Chocolate 5,000 Actual Pounds Purchased and Used 75,500 Actual production (cases) Cocoa 1.68 Actual Labor Rate $16.40 113,800 Actual Labor Hours Used 800 Sugar Dark chocolate Light chocolate 16.40 1,800