Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis Santiago 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 78,000 units of product were as follows: Line Item Description Standard Costs Actual Costs Direct materials 241,800 lbs. at $4.60 per lb. 239,400 lbs. at $4.50 per lb. Direct labor 19,500 hrs. at $18.20 per hr. 19,950 hrs. at $18.60 per hr. Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 20,350 direct labor hrs.: Factory overhead Variable cost, $4.70 $90,730 variable cost Factory overhead Fixed cost, $7.40 $150,590 fixed cost Each unit requires 0.25 hour of direct labor