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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 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.

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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.

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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.

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Price variance Quantity variance Total direct materials cost variance

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