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 4,400 units of product were as follows:

Standard Costs Actual Costs

Direct materials 5,700 lb. at $5.50 5,600 lb. at $5.30

Direct labor 1,100 hrs. at $17.40 1,130 hrs. at $17.60

Factory overhead Rates per direct labor hr.,

based on 100% of normal capacity of 1,150 direct labor hrs.:

Variable cost, $4.40 $4,790 variable cost

Fixed cost, $7.00 $8,050 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.

Price variance $______ Favorable or Unfavorable

Quantity variance $______ Favorable or Unfavorable

Total direct materials cost variance $______ Favorable or Unfavorable

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.

Rate variance $______ Favorable or Unfavorable

Time variance $______ Favorable or Unfavorable

Total direct labor cost variance $______ Favorable or 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 or Unfavorable

Fixed factory overhead volume variance $______ Favorable or Unfavorable

Total factory overhead cost variance $______ Favorable or Unfavorable