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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
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: Standard Costs Actual Costs Direct materials Direct labor 241,800 lbs. at $5.00 per lb. 239,400 lbs. at $4.90 per lb. 19,500 hrs. at $16.50 per hr. 19,950 hrs. at $16.90 per hr. Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 20,350 direct labor hrs.: $61,780 variable cost $103,785 fixed cost Variable cost, $3.20 Fixed cost, $5.10 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 Direct Materials Quantity Variance Total Direct Materials Cost Variance -23,940 Favorable -12,000 -35,940 V Favorable 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 Direct Labor Time Variance Total Direct Labor Cost Variance 7,980 7,425 V Unfavorable 15,405 Unfavorable Unfavorable Check My Work 1 more Check My Work uses remaining Previous Direct Materials Quantity Variance Total Direct Materials Cost Variance -12,000 -35,940 Favorable 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 Direct Labor Time Variance Total Direct Labor Cost Variance 7,980 7,425 15,405 v Unfavorable Unfavorable 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 -620 Favorable 3,715 X Unfavorable 3,095 X Unfavorable Fixed factory overhead volume variance Total factory overhead cost variance Feedback Check My Wor Unfavorable variances can be thought of as increasing costs (a debit). Favorable variances can be thought of as decreasing costs (a credit). The variable factory overhead controllable variance is the difference between the actual variable overhead costs and the budgeted variable overhead for actual production. The fixed factory overhead valume variance is the difference between the budgeted fixed overhead at 100% of normal capacity and the standard fixed overhead for the actual units produced
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