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 70,000 units of product were as follows: Standard Costs Actual Costs Direct materials Direct labor Factory overhead 210,000 lbs. at $4.70 17,500 hrs. at $16.70 Rates per direct labor hr., based on 100% of normal 207,900 lbs. at $4.50 17,900 hrs. at $16.90 capacity of 18,260 direct labor hrs.: Variable cost, $4.40 $76,230 variable cost Fixed cost, $7.00 $127,820 fixed cost Each unit requires 0.25 hour of direct labor.