Problem 7-2A
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:
Standard Amount per Case
Dark Chocolate Light Chocolate Standard Price per Pound
Cocoa 10 lbs. 7 lbs. Sugar 8 lbs. 12 lbs. Standard labor time 0.35 hr. 0.40 hr.
$4.50
0.65
Dark Chocolate Light Chocolate
Planned production Standard labor rate
4,200 cases $14.50 per hr.
10,500 cases 514.50 per hr.
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:
Dark Chocolate Light Chocolate
Actual production (cases)
4,000 11,000
Actual Price per Pound Actual Pounds Purchased and Used
Cocoa $4.60 1 I 7,500 Sugar 0.60 160,000 Actual Labor Rate Actual Labor Hours Used
Dark chocolate $13.90 per hr. Light chocolate 14.90 per hr.
1,270
4,500
Attachments:
Screen-Shot-2….png
Screen-Shot-2….png