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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 6,000 units of product were as follows:

	Standard Costs		Actual Costs
Direct materials	7,800 lb. at $5.20		7,700 lb. at $5.00
Direct labor	1,500 hrs. at $18.50		1,530 hrs. at $18.70
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 1,560 direct
	labor hrs.:
		Variable cost, $2.80	$4,160 variable cost
		Fixed cost, $4.40	$6,864 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.

Direct materials price variance	$fill in the blank 1	Favorable
Direct materials quantity variance	fill in the blank 3	Favorable
Total direct materials cost variance	$fill in the blank 5	Favorable

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	$fill in the blank 7	Unfavorable
Direct labor time variance	fill in the blank 9	Unfavorable
Total direct labor cost variance	$fill in the blank 11	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	$fill in the blank 13	Favorable
Fixed factory overhead volume variance	fill in the blank 15	Unfavorable
Total factory overhead cost variance	$fill in the blank 17	Unfavorable