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 40,000 units of product were as follows:

	Standard Costs		Actual Costs
Direct materials	120,000 lbs. at $3.20 per lb.		118,500 lbs. at $3.25 per lb.
Direct labor	12,000 hrs. at $24.40 per hr.		11,700 hrs. at $25.00 per hr.
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 15,000 direct
	labor hrs.:
		Variable cost, $8.00	$91,200 variable cost
		Fixed cost, $10.00	$150,000 fixed cost

Each unit requires 0.3 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 Material Price Variance	$	Unfavorable
Direct Materials Quantity Variance	$	Favorable
Total Direct Materials Cost Variance	$	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.

Direct Labor Rate Variance	$	Unfavorable
Direct Labor Time Variance	$	Favorable
Total Direct Labor Cost Variance	$	Favorable

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

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 Unfavorable Favorable Unfavorable 5,925 4,800 X 1,125V Direct Material 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 an unfavorable variance as a positive number Direct Labor Rate Variance Unfavorable Favorable Favorable 7,020 7,320 X Direct Labor Time Variance 300X 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 4,800 X Favorable V 30,000 Unfavorable 25,200Unfavorabl Variable factory overhead controllable variance Fixed factory overhead volume variance Total factory overhead cost variance