Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis
Mackinaw Inc. processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 70,000 units of product were as follows:
|Standard Costs||Actual Costs|
|Direct materials||217,000 lbs. at $5.80||214,800 lbs. at $5.70|
|Direct labor||17,500 hrs. at $17.20||17,900 hrs. at $17.50|
|Factory overhead||Rates per direct labor hr.,|
|based on 100% of normal|
|capacity of 18,260 direct|
|Variable cost, $3.60||$62,370 variable cost|
|Fixed cost, $5.70||$104,082 fixed cost|
Each unit requires 0.25 hour of direct labor.
a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
|Direct Materials Price Variance||$||Favorable|
|Direct Materials Quantity Variance||$||Favorable|
|Total Direct Materials Cost Variance||$||Favorable|
b. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
|Direct Labor Rate Variance||$||Unfavorable|
|Direct Labor Time Variance||$||Unfavorable|
|Total Direct Labor Cost Variance||$||Unfavorable|
c. Determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
|Variable factory overhead controllable variance||$||Favorable|
|Fixed factory overhead volume variance||$||Unfavorable|
|Total factory overhead cost variance||$||Unfavorable|
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