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 5,600 units of product were as follows:

	Standard Costs		Actual Costs
Direct materials	7,300 lb. at $5.10		7,200 lb. at $5.00
Direct labor	1,400 hrs. at $16.30		1,430 hrs. at $16.50
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 1,460 direct
	labor hrs.:
		Variable cost, $3.30	$4,570 variable cost
		Fixed cost, $5.20	$7,592 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
Direct materials quantity variance	fill in the blank 3
Total direct materials cost variance	$fill in the blank 5

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
Direct labor time variance	fill in the blank 9
Total direct labor cost variance	$fill in the blank 11

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	$fill in the blank 13
Fixed factory overhead volume variance	fill in the blank 15
Total factory overhead cost variance	$fill in the blank 17

Direct Materials and Direct Labor Variances

At the beginning of June, Kimber Toy Company budgeted 14,000 toy action figures to be manufactured in June at standard direct materials and direct labor costs as follows:

Direct materials	$29,400
Direct labor	6,300
Total	$35,700

The standard materials price is $0.70 per pound. The standard direct labor rate is $9.00 per hour. At the end of June, the actual direct materials and direct labor costs were as follows:

Actual direct materials	$27,900
Actual direct labor	6,000
Total	$33,900

There were no direct materials price or direct labor rate variances for June. In addition, assume no changes in the direct materials inventory balances in June. Kimber Toy Company actually produced 12,900 units during June.

Determine the direct materials quantity and direct labor time variances. Round your per unit computations to two decimal places, if required. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Direct materials quantity variance	$fill in the blank 1
Direct labor time variance	$fill in the blank 3