Direct Materials, Direct Labor, andFactory Overhead Cost VarianceAnalysis

Mackinaw Inc. processes a base chemical into plastic.Standard costsand actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 70,000 units of product were as follows:

	Standard Costs	Actual Costs
Direct materials	196,000 lbs. at $4.60	194,000 lbs. at $4.40
Direct labor	17,500 hrs. at $18.20	17,900 hrs. at $18.50
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 18,260 direct
	labor hrs.:
		Variable cost, $3.50	$60,640 variable cost
		Fixed cost, $5.50	$100,430 fixed cost

Each unit requires 0.25 hour of direct labor.

Required:

a. Determine the direct materialsprice variance, direct materialsquantity variance, and total direct materialscost 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	fill in the blank	Favorable/Unfavorable
Direct Materials Quantity Variance	fill in the blank	Favorable/Unfavorable
Total Direct Materials Cost Variance	fill in the blank	Favorable/Unfavorable

b. Determine the direct laborrate variance, direct labortime 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	fill in the blank	Favorable/Unfavorable
Direct Labor Time Variance	fill in the blank	Favorable/Unfavorable
Total Direct Labor Cost Variance	fill in the blank	Favorable/Unfavorable

c. Determine the variable factory overheadcontrollable variance, fixed factory overheadvolume 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	fill in the blank	Favorable/Unfavorable
Fixed factory overhead volume variance	fill in the blank	Favorable/Unfavorable
Total factory overhead cost variance	fill in the blank	Favorable/Unfavorable