PR 22-3B Direct materials, direct labor, and factory overhead Obj. 3, 4 cost variance analysis Road Gripper Tire Co. manufactures automobile tires. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 4,160 tires were as follows: Standard Costs Actual Costs Direct materials 100,000 lbs. at $6.40 101,000 lbs. at $6.50 Direct labor 2,080 hrs. at $15.75 2,000 hrs. at $15.40 Factory overhead Rates per direct labor hr. based on 100% of normal capacity of 2,000 direct labor hrs.: Variable cost, $4.00 $8,200 variable cost Fixed cost, $6.00 $12,000 fixed cost Each tire requires 0.5 hour of direct labor. Instructions Determine (A) the direct materials price variance, direct materials quantity variance, and total direct materials cost variance; (B) the direct labor rate variance, direct labor time variance, and total direct labor cost variance; and (C) the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance. Direct Materials Cost Variance Price variance: Actual price $6.50 Standard price 6.40 Variance Actual quantity Direct materials price variance D Quantity variance: Actual quantity Standard quantity Variance Standard price Direct materials price variance Total direct materials cost variance m Direct Labor Cost Variance Rate variance: Actual rate per hour Standard rate per hour Variance Actual hours Direct labor rate variance Time variance: Actual direct labor hours Standard direct labor hours Variance Standard rate per hour Direct labor time variance Total direct labor cost variance Alternative Computation of Overhead Variances: Factory Overhead Cost Variance Variable factory overhead controllable variance: Actual variable FO cost incurred Budgeted variable FO cost for 2,080 hrs. Variance Factory Overhead Applied costs Actual costs Balance Fixed factory overhead volume variance: Hours at normal capacity Standard hours for amount produced Productive capacity not used Standard fixed FO cost rate Variance Actual Factory Overhead Applied Factory Overhead Budgeted Factory Overhead for Amount Produced Variable cost Fixed cost Total Total factory overhead cost variance Controllable Variance Volume Variance Total Factory Overhead Cost Variance