I LOVE MY CHOCOLATE COMPANY MAKES DARK CHOCOLATE AND LIGHT CHOCOLATE. BOTH PRODU

Question

I LOVE MY CHOCOLATE COMPANY MAKES DARK CHOCOLATE AND LIGHT CHOCOLATE. BOTH PRODUCTS REQUIRE COCOA AND SUGAR. THE FOLLOWING INOFORMATION HAS BEEN MADE AVAILABLE:

STANDARD AMOUNT PER CASE:

DARK CHOCOLATE LIGHT CHOCOLATE STANDARD PRICE PER POUND

COCOA: 12LBS 8LBS 7.25

SUGAR: 10LBS 14LBS 1.40

STAND.LABOR TIME: .50 HR .60HR

PLANNED PRODUCTION: 4700 CASES 11000 CASES

STAND. LABOR RATE: $15.50 PER HR $15.50 PER HR

I LOVE MY CHOCOLATE COMPANY DOES NOT EXPECT THERE TO BE ANY BEGINIING OR ENDING INVENTORIES OF COCOA OR SUGAR. AT THE END OF THE YEAR BUDGET YEAR, I LOVE MY CHOCOLATE COMPANY HAD THE FOLLOWING ACTUAL RESULTS:

DARK CHOCOLATE LIGHT CHOCOLATE

ACTUAL PRODUCTION (CASES): 5000 10000

ACTUAL PRICE PER LBS ACTUAL LBS PURCHASED AND USED

COCOA $ 7.33 140300

SUGAR $1.35 188000

ACTUAL LABOR RATE ACTUAL LABOR HOURS USED

DARK CHOCOLATE $15.25 2360

LIGHT CHOCOLATE $15.80 6120

PREPARE THE FOLLOWING VARIANCE ANALYSIS FOR BOTH CHOCOLATES AND THE TOTAL, BASED ON THE ACTUAL RESULTS AND PRODUCTION LEVELS AT THE END OF THE BUDGET YEAR:

A. DIRECT LABOR RATE, TIME, AND TOTAL VARIANCE.

Explanation / Answer

For DARK CHOCOLATE

A. DIRECT LABOR RATE VARIANCE.= (Stadard Rate- Actual Rate) * Actual Hour

DIRECT LABOR RATE VARIANCE.= (15.50-15.25) * 2360

DIRECT LABOR RATE VARIANCE.= $ 590 Favorable

A. DIRECT LABOR TIME VARIANCE = ( Standard Hour - Actual Hour) * Standard Rate

DIRECT LABOR TIME VARIANCE = (5000*0.50 - 2360) * 15.50

DIRECT LABOR TIME VARIANCE = ( 2500 - 2360) * 15.50

DIRECT LABOR TIME VARIANCE = $ 2170 Favorable

A. DIRECT LABOR TOTAL VARIANCE= ( Standard Hour * Standard Rate - Actual Hour* Actual Rate)

DIRECT LABOR TOTAL VARIANCE= ( 2500*15.50 - 2360*15.25)

DIRECT LABOR TOTAL VARIANCE= $ 2760 Favorable

For LIGHT CHOCOLATE

A. DIRECT LABOR RATE VARIANCE.= (Stadard Rate- Actual Rate) * Actual Hour

DIRECT LABOR RATE VARIANCE.= (15.50-15.80) * 6120

DIRECT LABOR RATE VARIANCE.= $ 1836 Unfavorable

A. DIRECT LABOR TIME VARIANCE = ( Standard Hour - Actual Hour) * Standard Rate

DIRECT LABOR TIME VARIANCE = (10000*0.60 - 6120) * 15.50

DIRECT LABOR TIME VARIANCE = ( 6000 - 6120) * 15.50

DIRECT LABOR TIME VARIANCE = $ 1860 Unfavorable

A. DIRECT LABOR TOTAL VARIANCE= ( Standard Hour * Standard Rate - Actual Hour* Actual Rate)

DIRECT LABOR TOTAL VARIANCE= ( 6000*15.50 - 6120*15.80)

DIRECT LABOR TOTAL VARIANCE= $ 3696 Unfavorable

For Both Chocolate in Total

A. DIRECT LABOR RATE VARIANCE.= $ 590 Favorable + $ 1836 Unfavorable

DIRECT LABOR RATE VARIANCE.= $ 1246 Unfavorable

A. DIRECT LABOR TIME VARIANCE = $ 2170 Favorable + $ 1860 Unfavorable

DIRECT LABOR TIME VARIANCE = $ 310 Favorable

A. DIRECT LABOR TOTAL VARIANCE= $ 2760 Favorable + $ 3696 Unfavorable

DIRECT LABOR TOTAL VARIANCE= $ 936 Unfavorable

Note:

Standard Hour = ACTUAL PRODUCTION (CASES)* STAND.LABOR TIME

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