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 74,000 units of product were as follows:

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 74,000 units of product were as follows: Standard Costs Actual Costs Direct materials 251,600 lbs. at $5.50 249, 100 lbs. at $5.40 Direct labor 18,500 hrs. at $18.40 18,930 hrs. at $18.70 Factory overhead Rates per direct labor hr, based on 100% of normal % capacity of 19.310 direct labor hrs.: Variable cost, $3.50 $64,100 variable cost $106,205 fixed cost Fixed cost, $5.50 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 -24,910 Favorable Direct Materials Quantity Variance $ -13,750 Favorable Total Direct Materials Cost Variance $ 114,140 x 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 III 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 Feedback Check My Work Unfavorable variances can be thought of as increasing costs (a debit). Favorable variances can be thought of as decreasing costs (a credit). The variable factory overhead controllable variance is the difference between the actual variable overhead costs and the budgeted variable overhead for actual production. The fixed factory overhead volume variance is the difference between the budgeted fixed overhead at 100% of normal capacity and the standard fixed overhead for the actual units produced