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

Santiago 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 78,000 units of product were as follows:

Line Item Description	Standard Costs	Actual Costs
Direct materials	210,600 lbs. at $5.10 per lb.	208,500 lbs. at $4.90 per lb.
Direct labor	19,500 hrs. at $17.00 per hr.	19,950 hrs. at $17.20 per hr.
Factory overhead	Rates per direct labor hr., based on 100% of normal capacity of 20,350 direct labor hrs.:
Factory overhead	Variable cost, $3.00	$57,920 variable cost
Factory overhead	Fixed cost, $4.70	$95,645 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.

Line Item Description	Amount	Variance
Direct Materials Price Variance	$	Favorable or Unfavorable
Direct Materials Quantity Variance	$	Favorable or Unfavorable
Total Direct Materials Cost Variance	$	Favorable or 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.

Line Item Description	Amount	Variance
Direct Labor Rate Variance	$	Favorable or Unfavorable
Direct Labor Time Variance	$	Favorable or Unfavorable
Total Direct Labor Cost Variance	$	Favorable or Unfavorable

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.

Line Item Description	Amount	Variance
Variable factory overhead controllable variance	$	Favorable or Unfavorable
Fixed factory overhead volume variance	$	Favorable or Unfavorable
Total factory overhead cost variance	$	Favorable or Unfavorable