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 overh incurred for the manufacture of $70,000$ units of product were as follows:

Standard Costs

Actual coste

Direct materials

$217,000lbs$ at $$5\mathrm{.}30$ per lb$.$

$214,800$ lbs$.$ at $$5\mathrm{.}10$ per Ib$.$

Direct labor

$17,500hrs$ at $$18\mathrm{.}50$ per hro

$17,900$ hrs$.$ at $$18\mathrm{.}80$ per hr:

Rates per direct labor hro, based on $100\%$ of normal

Factory overhead

capacily of $18,260$ direct labor hrs$.$:

Variable cost, $$4\mathrm{.}20$

$$72,770$ variable cost

Fixed cost, $$6\mathrm{.}60$

$$120,516$ fixed cost

Each unit requires $0\mathrm{.}25$ 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

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

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