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 DescriptionStandard CostsActual CostsDirect materials265,200 lbs. at $5.20 per lb.262,500 lbs. at $5.10 per lb.Direct labor19,500 hrs. at $18.40 per hr.19,950 hrs. at $18.80 per hr.Factory overheadRates per direct labor hr., based on 100% of normal capacity of 20,350 direct labor hrs.: Factory overhead Variable cost, $3.30$63,710 variable costFactory overhead Fixed cost, $5.20$105,820 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.

Line Item DescriptionAmountVarianceDirect Materials Price Variance$fill in the blank 1FavorableUnfavorableFavorableDirect Materials Quantity Variance$fill in the blank 3FavorableUnfavorableFavorableTotal Direct Materials Cost Variance$fill in the blank 5FavorableUnfavorableFavorable

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 DescriptionAmountVarianceDirect Labor Rate Variance$fill in the blank 7FavorableUnfavorableUnfavorableDirect Labor Time Variance$fill in the blank 9FavorableUnfavorableUnfavorableTotal Direct Labor Cost Variance$fill in the blank 11FavorableUnfavorableUnfavorable

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 DescriptionAmountVarianceVariable factory overhead controllable variance$fill in the blank 13FavorableUnfavorableFavorableFixed factory overhead volume variance$fill in the blank 15FavorableUnfavorableUnfavorableTotal factory overhead cost variance$fill in the blank 17FavorableUnfavorableUnfavorable