PR 22-2A

PR 22-2A Flexible budgeting and variance analysis OBJ. 1, 2, 3 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 Cocoa Sugar Standard labor time 12 lbs 10lbs 0.50 hr 8 lbs 4 lbs 0.60 hr Standard Price per Pound $7.25 1.40 Planned production Standard labor rate Dark Chocolate 4,700 cases 15.50 per hr Light Chocolate 11,000 cases 15.50 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 5,000 Actual Price per Pound $7.33 1.35 Actual Labor Rate Light Chocolate 10,000 Actual Pounds Purchased and Used 140,300 188,000 Actual Labor Hours Usecd 2,360 6,120 Actual production (cases) Cocoa Sugar Dark chocolate 15.25 per hr 15.80 per h Light chocolate Instructions 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, quantity, and total variance Answer Check Figure: Direct materials quantity variance, $625 b. Direct labor rate, time, and total variance 2. Why are the standard amounts in part (1) based on the actual production for the year instead of the planned production for the year