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

Mackinaw 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:

	Standard Costs		Actual Costs
Direct materials	265,200 lbs. at $5.40		262,500 lbs. at $5.20
Direct labor	19,500 hrs. at $17.70		19,950 hrs. at $18.00
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 20,350 direct
	labor hrs.:
		Variable cost, $4.10	$79,150 variable cost
		Fixed cost, $6.50	$132,275 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.

Direct Materials Price Variance	$fill in the blank 1	Favorable
Direct Materials Quantity Variance	$fill in the blank 3	Favorable
Total Direct Materials Cost Variance	$fill in the blank 5	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.

Direct Labor Rate Variance	$fill in the blank 7	Unfavorable
Direct Labor Time Variance	$fill in the blank 9	Unfavorable
Total Direct Labor Cost Variance	$fill in the blank 11	Unfavorable

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.

Variable factory overhead controllable variance	$fill in the blank 13	Favorable
Fixed factory overhead volume variance	$fill in the blank 15	Unfavorable
Total factory overhead cost variance	$fill in the blank 17	Unfavorable