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 4,400 units of product were as follows:

	Standard Costs		Actual Costs
Direct materials	5,700 lb. at $5.40		5,600 lb. at $5.20
Direct labor	1,100 hrs. at $17.60		1,130 hrs. at $18.00
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 1,150 direct
	labor hrs.:
		Variable cost, $3.10	$3,380 variable cost
		Fixed cost, $4.90	$5,635 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 -1120	$ -1120	Favorable
Quantity variance -540	$-540	Favorable
Total direct materials cost variance -1660	$-1660	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 452	$452	Unfavorable
Time variance 528	$528	Unfavorable
Total direct labor cost variance 980	$980	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