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      Standard Price per Pound Cocoa 9 lbs.   6 lbs.   $5.30   Sugar 7 lbs.   11 lbs.   0.60   Standard labor time 0.4 hr.   0.5 hr.           Dark Chocolate Light Chocolate Planned production 5,000 cases   11,500 cases   Standard labor rate $14.50 per hr.   $14.50 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) 4,800 12,000        Actual Price per Pound      Actual Pounds Purchased and Used Cocoa $5.40   115,800   Sugar 0.55   161,500     Actual Labor Rate      Actual Labor Hours Used Dark chocolate $14.20 per hr.   1,750   Light chocolate 14.80 per hr.   6,150   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. a.   Direct materials price variance $fill in the blank 1     Direct materials quantity variance $fill in the blank 3     Total direct materials cost variance $fill in the blank 5           b.   Direct labor rate variance $fill in the blank 7     Direct labor time variance $fill in the blank 9     Total direct labor cost variance $fill in the blank 11   2.  The variance analyses should be based on the     amounts at     volumes. The budget must flex with the volume changes. If the     volume is different from the planned volume, as it was in this case, then the budget used for performance evaluation should reflect the change in direct materials and direct labor that will be required for the     production. In this way, spending from volume changes can be separated from efficiency and price variances.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Topic Video
Question

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      Standard Price per Pound
Cocoa 9 lbs.   6 lbs.   $5.30  
Sugar 7 lbs.   11 lbs.   0.60  
Standard labor time 0.4 hr.   0.5 hr.      

 

  Dark Chocolate Light Chocolate
Planned production 5,000 cases   11,500 cases  
Standard labor rate $14.50 per hr.   $14.50 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) 4,800 12,000
       Actual Price per Pound      Actual Pounds Purchased and Used
Cocoa $5.40   115,800  
Sugar 0.55   161,500  
  Actual Labor Rate      Actual Labor Hours Used
Dark chocolate $14.20 per hr.   1,750  
Light chocolate 14.80 per hr.   6,150  

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.

a.   Direct materials price variance $fill in the blank 1
 
  Direct materials quantity variance $fill in the blank 3
 
  Total direct materials cost variance $fill in the blank 5
 
       
b.   Direct labor rate variance $fill in the blank 7
 
  Direct labor time variance $fill in the blank 9
 
  Total direct labor cost variance $fill in the blank 11
 

2.  The variance analyses should be based on the 

 

 amounts at 

 

 volumes. The budget must flex with the volume changes. If the 

 

 volume is different from the planned volume, as it was in this case, then the budget used for performance evaluation should reflect the change in direct materials and direct labor that will be required for the 

 

 production. In this way, spending from volume changes can be separated from efficiency and price variances. 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 10 images

Blurred answer
Knowledge Booster
Performance measurements
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education