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 6,400 units of product were as follows:
Standard Costs | Actual Costs | ||
Direct materials | 8,300 lb. at $4.90 | 8,200 lb. at $4.70 | |
Direct labor | 1,600 hrs. at $17.80 | 1,640 hrs. at $18.20 | |
Factory overhead | Rates per direct labor hr., | ||
based on 100% of normal | |||
capacity of 1,670 direct | |||
labor hrs.: | |||
Variable cost, $4.10 | $6,490 variable cost | ||
Fixed cost, $6.50 | $10,855 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.
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.
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.
Price variance Quantity variance Total direct materials cost varianceStep by Step Solution
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