Assignment 6a - Problem Set Question PR.22-2.ALGO Question Ex.22-3.Algo Question

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Assignment 6a - Problem Set

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PR.22-2.ALGO

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Ex.22-3.Algo

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Ex.22-15.Algo

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Ex.22-22.Algo

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PE.22-7.B

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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 11 lbs. 8 lbs. $4.5 Sugar 9 lbs. 13 lbs. 0.6 Standard labor time 0.3 hr. 0.4 hr.

Explanation / Answer

Solution:

(A). Material Price Varience:

(1). Dark Chocolate:

Material Price Varience = 3,800 * 5.15 - 3,800 * 5.1

   = 19,570 - 19,380

= 190

(2). Light Chocolate:

   Material Price Varience = 12,700 * 5.15 - 12,700 * 5.1

= 65,405 - 64,770   

= 635

(B). Material Quantity Varience:

(1). Dark Chocolate:

Material Quantity Varience = 4,000 - 3,800 * 5.1

= 1,020

(2). Light Chocolate:

     Material Price Varience = 12,700 - 12,200 * 5.1

= 500 * 5.1

= 2,550

(C). Direct Labour Cost Varience:

  (1). Dark Chocolate:

   Labour Cost Varience = 14 - 13.5 * 1,040

= 0.5 * 1,040

   = 520

(2). Light Chocolate:

     Labour Cost Varience = 14.5 - 14 * 5,210

= 0.5 * 5,210

   = 2,605

(D). Direct Labour Time Varience:

(1). Dark Chocolate:

Labour Time Varience = 1,040 * 14

   = 14,560

(2). Light Chocolate:

   Labour Time Varience = 5,210 * 14

= 72,940

   Material Price Varience = Actual Quantity * Actual Price - Actual Quantity * Standered Price

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