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Homework answers / question archive / Brussels Chocolate Company produces chocolates in large batches
Brussels Chocolate Company produces chocolates in large batches. One batch of chocolate has the following standard costs and amounts: (12 marks)
Standard kilograms of sugar
125
Standard cost per kilogram of sugar
$1.60
Standard direct labour hours
0.75
Standard direct labour cost per hour
$21.00
Brussels Chocolate Company produced 600 batches of chocolates in the most recent month. Actual input costs and per batch usage levels were as follows:
Actual kilograms of sugar used
126
Actual cost per kilogram of sugar
$1.65
Actual direct labour hours
0.80
Actual direct labour cost per hour
$20.75
Required:
a. Calculate the total material input rate variance.
b. Calculate the total material efficiency variance.
c. Calculate the total labour rate variance.
d. Calculate the total labour efficiency variance.
a) Material Input Rate Variance:
Material Input Rate Variance = Actual Material Used*(Actual Rate - Standard Rate)*Number of Batches
= 126*(1.65 - 1.60)*600
= $3,780 (Unfavorable)
b) Material Efficiency Variance:
Material Efficiency Variance = Standard Rate*(Actual Material Used - Standard Material Used for Actual Production)*Number of Batches
= 1.60*(126 - 125)*600
= $960 (Unfavorable)
c) Direct Labor Rate Variance:
Direct Labor Rate Variance = Actual Hours*(Actual Rate Per Hour - Standard Rate Per Hour)*Number of Batches
= 0.80*(20.75 - 21)*600
= $120 (Favorable)
d) Direct Labor Efficiency Variance:
Direct Labor Efficiency Variance = Standard Rate Per Hour*(Actual Hours - Standard Hours Used in Actual Production)*Number of Batches
= 21*(0.80 - 0.75)*600
= $630 (Unfavorable)
