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 6,000 units of product were as follows:

	Standard Costs		Actual Costs
Direct materials	7,800 lbs. at $4.9		7,700 lbs. at $4.7
Direct labor	1,500 hrs. at $16.1		1,530 hrs. at $16.5
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 1,560 direct
	labor hrs.:
		Variable cost, $4.1	$6,090 variable cost
		Fixed cost, $6.5	$10,140 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	$	(favorable or unfavorable?)
Quantity variance	$	(favorable or unfavorable?)
Total direct materials cost variance	$	(favorable or 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.

Rate variance	$	(favorable or unfavorable?)
Time variance	$	(favorable or unfavorable?)
Total direct labor cost variance	$	(favorable or unfavorable?)

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	$	(favorable or unfavorable?)
Fixed factory overhead volume variance	$	(favorable or unfavorable?)
Total factory overhead cost variance	$	(favorable or unfavorable?)