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 6,400 units of product were as follows:

	Standard Costs		Actual Costs
Direct materials	8,300 lbs. at $5.8		8,200 lbs. at $5.6
Direct labor	1,600 hrs. at $18.3		1,640 hrs. at $18.7
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 1,670 direct
	labor hrs.:
		Variable cost, $4	$6,340 variable cost
		Fixed cost, $6.3	$10,521 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
Quantity variance	$	Favorable
Total direct materials cost variance	$	Favorable

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	$	Unfavorable
Time variance	$	Unfavorable
Total direct labor cost variance	$	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
Fixed factory overhead volume variance	$	Unfavorable
Total factory overhead cost variance	$	Unfavorable