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 5,200 units of product were as follows:

	Standard Costs		Actual Costs
Direct materials	6,800 lbs. at $6.10		6,700 lbs. at $5.90
Direct labor	1,300 hrs. at $16.40		1,330 hrs. at $16.80
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 1,360 direct
	labor hrs.:
		Variable cost, $3.90	$5,020 variable cost
		Fixed cost, $6.20	$8,432 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	$	SelectFavorableUnfavorableItem 2
Quantity variance	$	SelectFavorableUnfavorableItem 4
Total direct materials cost variance	$	SelectFavorableUnfavorableItem 6

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	$	SelectFavorableUnfavorableItem 8
Time variance	$	SelectFavorableUnfavorableItem 10
Total direct labor cost variance	$	SelectFavorableUnfavorableItem 12

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	$	SelectFavorableUnfavorableItem 14
Fixed factory overhead volume variance	$	SelectFavorableUnfavorableItem 16
Total factory overhead cost variance	$	SelectFavorableUnfavorableItem 18