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 78,000 units of product were as follows: Standard Costs Actual Costs Direct materials 241,800 lbs. at $4.70 239,400 lbs. at $4.50 Direct labor 19,500 hrs. at $18.60 19,950 hrs. at $18.80 Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 20,350 direct labor hrs.: Variable cost, $3.70 $71,430 variable cost Fixed cost, $5.80 $118,030 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 Direct Materials Quantity Variance Total Direct Materials Cost Variance Fixed cost, $5.80 $118,030 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 $ 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 a 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 $ Factory Overhead Cost Variance Report Feeling Better Medical Inc., a manufacturer of disposable medical supplies, prepared the following factory overhead cost budget for the Assembly Department for October of the current year. The company expected to operate the department at 100% of normal capacity of 5,300 hours. Variable costs: Indirect factory wages $17,490 Power and light 11,819 Indirect materials 10,229 Total variable cost $39,538 Fixed costs: Supervisory salaries $10,120 Depreciation of plant and equipment 25,950 Insurance and property taxes 7,920 Total fixed cost 43,990 Total factory overhead cost $83,528 During October, the department operated at 5,600 standard hours, and the factory overhead costs incurred were indirect factory wages, $18,660; power and light, $12,260; indirect materials, $11,000; supervisory salaries, $10,120; depreciation of plant and equipment, $25,950; and insurance and property taxes, $7,920. Required: Prepare a factory overhead cost variance report for October. To be useful for cost control, the budgeted amounts should be based on 5,600 hours. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your per unit computations to the nearest cent, if required. If an amount box does not require an entry, leave it blank. Feeling Better Medical Inc. Factory Overhead Cost Variance Report-Assembly Department For the Month Ended October 31 Normal capacity for the month 5,300 hrs. Actual production for the month 5,600 hrs. Budget Actual (at Actual Cost Production) Variable factory overhead costs: Unfavorable Variances Favorable Variances Indirect factory wages $ Power and light Indirect materials Total variable cost Fixed factory overhead costs: Supervisory salaries $ Depreciation of plant and equipment Insurance and property taxes Total fixed cost $ $ Total factory overhead cost Total controllable variances Actual Cost Budget (at Actual Production) Unfavorable Variances Favorable Variances Variable factory overhead costs: Indirect factory wages $ $ Power and light Indirect materials Total variable cost $ Fixed factory overhead costs: Supervisory salaries $ Depreciation of plant and equipment Insurance and property taxes Total fixed cost Total factory overhead cost $ Total controllable variances $ Volume variance-favorable: Excess hours used over normal at the standard rate for fixed factory overhead $
