Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis

Eastern Polymers, 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 6,000 units of product were as follows:

	Standard Costs		Actual Costs
Direct materials	7,800 lbs. at $5.5		7,700 lbs. at $5.4
Direct labor	1,500 hrs. at $18.5		1,530 hrs. at $18.7
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 1,560 direct
	labor hrs.:
		Variable cost, $4.8	$7,130 variable cost
		Fixed cost, $7.6	$11,856 fixed cost

Each unit requires 0.25 hour of direct labor.