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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 6,400 units of product were as follows:

	Standard Costs		Actual Costs
Direct materials	8,300 lb. at $4.90		8,200 lb. at $4.70
Direct labor	1,600 hrs. at $17.80		1,640 hrs. at $18.20
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 1,670 direct
	labor hrs.:
		Variable cost, $4.10	$6,490 variable cost
		Fixed cost, $6.50	$10,855 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.

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.

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.

Price variance Quantity variance Total direct materials cost variance

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