FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:a.
1
B
4
5
6
7
8
9
0
-1
2
3
54
55
56
67
58
59
70
Direct Materials Variance
Price variance:
Actual price
Standard price
Variance
Actual quantity (lbs.)
Direct materials price variance (favorable) unfavorable
Quantity variance:
Actual quantity used (lbs.)
Standard quantity used (lbs.)
Variance (lbs.)
Standard price
Direct materials quantity variance (favorable) unfavorable
Total direct materials cost variance (favorable) unfavorable
Total direct materials cost variance:
Actual cost
Standard cost
Total direct materials cost variance (favorable) unfavorable
Supporting calculations:
Standard quantity used of cocoa:
Cases produced
Standard amount per case (lbs.)
Total
Standard quantity used of sugar:
Cases produced
Standard amount per case (lbs.)
Total
Direct Labor Variance
Rate variance:
Actual rate
Standard rate
Variance
Actual time
Direct labor rate variance (favorable) unfavorable
Time variance
Actual tiime
Standard time
Variance
Standard rate
Direct labor time variance (favorable) unfavorable
Total direct labor cost variance (favorable) unfavorable
Total direct labor cost variance:
Actual cost
Standard cost
Total direct labor cost variance (favorable) unfavorable
$
$
$
$
$
$
$
Cocoa
Dark Chocolate
$
7.33
(7.25)
0.08
140,300
11,224
Dark Chocolate
$
140,300
(140,000)
300
$7.25
2,175
15.25
(15.50)
(0.25)
2,360
(590)
2,360
(2,500)
(140)
$15.50
(2,170)
2,360
(140)
$
$
$
188,000
(190,000)
(2,000)
$1.40
$ (2,800)
Light Chocolate
$
$
Sugar
Light Chocolate
$
1.35
(1.40)
(0.05)
188,000
(9,400)
$
15.80
(15.50)
0.30
6,120
1,836
6,120
(6,000)
120
$15.50
1,860
$
$
$
$
$
Total
(625)
$ 1,199
1,824
1,199
Total
Total
1,246
(310)
936
936
Transcribed Image Text:PR 23-2A 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:
Cocoa
Sugar
Standard labor time
Planned production
Standard labor rate
Cocoa
Sugar
Standard Amount per Case
Dark Chocolate Light Chocolate
Actual production (cases)
Dark chocolate
Light chocolate
Instructions
12 lbs.
10 lbs.
0.50 hr.
Dark Chocolate
4,700 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
$15.25 per hr.
15.80 per hr.
8 lbs.
14 lbs.
0.60 hr.
Standard Price per Pound
$7.25
1.40
Answer
Check Figure: Direct materials quantity variance, $(625) F
Light Chocolate
11,000 cases
$15.50 per hr.
Light Chocolate
10,000
Actual Pounds Purchased and Used
140,300
188,000
Actual Labor Hours Used
2,360
6,120
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.
b. Direct labor rate, time, and total variance.
Why are the standard amounts in part (1) based on the actual production for the
year instead of the planned production for the year?
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