Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis

Eastern Polymers, 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 6,800 units of product were as follows:

Standard Costs Actual Costs Direct materials 9,500 lbs. at $4.70 9,400 lbs. at $4.50 Direct labor 1,700 hrs. at $16.50 1,740 hrs. at $16.90 Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 1,770 direct labor hrs.: Variable cost, $4.10 $6,900 variable cost Fixed cost, $6.50 $11,505 fixed cost

Each unit requires 0.25 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.

Price variance $ Select Favorable Unfavorable Item 2 Quantity variance $ Select Favorable Unfavorable Item 4 Total direct materials cost variance $ Select Favorable Unfavorable Item 6

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.

Rate variance $ Select Favorable Unfavorable Item 8 Time variance $ Select Favorable Unfavorable Item 10 Total direct labor cost variance $ Select Favorable Unfavorable Item 12

c. Determine variable factory overhead controllable variance, the 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 $ Select Favorable Unfavorable Item 14 Fixed factory overhead volume variance $ Select Favorable Unfavorable Item 16 Total factory overhead cost variance $ Select Favorable Unfavorable