Question
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 5,600 units of product were as follows:
Standard Costs | Actual Costs | ||
Direct materials | 7,300 lb. at $5.80 | 7,200 lb. at $5.60 | |
Direct labor | 1,400 hrs. at $17.90 | 1,430 hrs. at $18.10 | |
Factory overhead | Rates per direct labor hr., | ||
based on 100% of normal | |||
capacity of 1,460 direct | |||
labor hrs.: | |||
Variable cost, $3.10 | $4,300 variable cost | ||
Fixed cost, $4.90 | $7,154 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 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 | $ | Favorable |
Fixed factory overhead volume variance | Unfavorable | |
Total factory overhead cost variance | $ | Unfavorable |
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