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 $40,000$ units of product were as follows:

Line Item Description Standard Costs Actual Costs

Direct materials $240,000$ lbs$.$ at $$6\mathrm{.}40$ per lb$.237,000$ lbs$.$ at $$6\mathrm{.}50$ per lb$.$

Direct labor $12,000$ hrs$.$ at $$24\mathrm{.}20$ per hr$.11,500$ hrs$.$ at $$25\mathrm{.}00$ per hr

Factory overhead Rates per direct labor hr$.,$ based on $100\%$ of normal capacity of $15,000$ direct labor hrs$.$:

Factory overhead Variable cost, $$2\mathrm{.}50$ $$32,400$ variable cost

Factory overhead Fixed cost, $$5\mathrm{.}00$ $$75,000$ fixed cost

Each unit requires $0\mathrm{.}3$ hour of direct labor.

Required:

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.

Line Item Description Amount Variance

Direct Materials Price Variance $fill in the blank $1$

Unfavorable

Direct Materials Quantity Variance $fill in the blank $3$

Favorable

Total Direct Materials Cost Variance $fill in the blank $5$

Unfavorable

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.

Line Item Description Amount Variance

Direct Labor Rate Variance $fill in the blank $7$

Unfavorable

Direct Labor Time Variance $fill in the blank $9$

Favorable

Total Direct Labor Cost Variance $fill in the blank $11$

Favorable

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.

Line Item Description Amount Variance

Variable factory overhead controllable variance $fill in the blank $13$

Unfavorable

Fixed factory overhead volume variance $fill in the blank $15$

Unfavorable

Total factory overhead cost variance $fill in the blank $17$

Unfavorable