Flexible Budgeting and Variance Analysis Belgian Chocolate Company makes dark ch
ID: 2459654 • Letter: F
Question
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:
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:
Required:
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.
Standard Amount per Case Dark Chocolate Light Chocolate Standard Price per Pound Cocoa 9 lbs. 6 lbs. $4.8 Sugar 7 lbs. 11 lbs. 0.6 Standard labor time 0.4 hr. 0.5 hr.Explanation / Answer
Direct Material Varriance-
Material Usage or Quantity Varriance= (SQ*SP)- (AQ*SP)
= $652440- $652920 = -$480 (U) = 480 Unfavourable
Material Price Varriance= (SP*AQ)- (AP*AQ)
= $652920 - $656710 = -$3790 (U)
Material Total Cost Varriance= (Standard Cost-Actual Cost) OR Material Price Varriance+Material Qty. Varriance
= -480+-3790 = -$4270 Unfavourable
LABOUR VARRIANCE-
Direct Labour Rate Varriance= (SR*AH)- (AR*AH)
= $104085-$105970 = -$1885
Direct Labour Efficiency or Time Varriance= (SR*SH)- (SR*AH)
= $675 FAVOURABLE
Total Labour Varriance= Labour Rate varriance+ Labour Efficiency varriance
= -1885+675= -$1210
Dark Chockolate Light Chockolate Actual Production (Cases) 5400 11200Related Questions
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