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 $74,000$ units of product were as follows:

Line Item Description Standard Costs Actual Costs

Direct materials $207,200$ lbs$.$ at $$5\mathrm{.}80$ per lb$.205,100$ lbs$.$ at $$5\mathrm{.}70$ per lb$.$

Direct labor $18,500$ hrs$.$ at $$17\mathrm{.}70$ per hr$.18,930$ hrs$.$ at $$18\mathrm{.}10$ per hr$.$

Factory overhead Rates per direct labor hr$.,$ based on $100\%$ of normal capacity of $19,310$ direct labor hrs$.$:

Factory overhead Variable cost, $$3\mathrm{.}00$ $$54,950$ variable cost

Factory overhead Fixed cost, $$4\mathrm{.}70$ $$90,757$ fixed cost

Each unit requires $0\mathrm{.}25$ hour of direct labor.

Required: 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

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

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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

Fixed factory overhead volume variance

Total factory overhead cost variance

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