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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

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 217,000 lbs. at $5.60 214,800 lbs. at $5.40
Direct labor 17,500 hrs. at $18.00 17,900 hrs. at $18.20
Factory overhead Rates per direct labor hr.,
based on 100% of normal
capacity of 18,260 direct
labor hrs.:
Variable cost, $3.90 $67,570 variable cost
Fixed cost, $6.20 $113,212 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 Favorable
Direct Materials Quantity Variance Favorable
Total Direct Materials Cost Variance 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 Unfavorable
Direct Labor Time Variance Unfavorable
Total Direct Labor Cost Variance 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 Favorable
Fixed factory overhead volume variance Unfavorable
Total factory overhead cost variance Unfavorable

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