Direct Materials, Direct Labor, and Factory Overhead CostVariance Analysis
Mackinaw Inc. processes a base chemical into plastic. Standardcosts and actual costs for direct materials, direct labor, andfactory overhead incurred for the manufacture of 70,000 units ofproduct were as follows:
| Standard Costs | Actual Costs |
| Direct materials | 210,000 lbs. at $5.30 | 207,900 lbs. at $5.20 |
| Direct labor | 17,500 hrs. at $17.50 | 17,900 hrs. at $17.70 |
| Factory overhead | Rates per direct labor hr., | |
| based on 100% of normal | |
| capacity of 18,260 direct | |
| labor hrs.: | |
| | Variable cost, $4.30 | $74,500 variable cost |
| | Fixed cost, $6.80 | $124,168 fixed cost |
Each unit requires 0.25 hour of direct labor.
Required:
a. Determine the direct materials pricevariance, direct materials quantity variance, and total directmaterials cost variance. Enter a favorable variance as a negativenumber using a minus sign and an unfavorable variance as a positivenumber.
| Direct Materials Price Variance | $ | |
| Direct Materials Quantity Variance | $ | |
| Total Direct Materials Cost Variance | $ | |
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 signand an unfavorable variance as a positive number.
| Direct Labor Rate Variance | $ | |
| Direct Labor Time Variance | $ | |
| Total Direct Labor Cost Variance | $ | |
c. Determine the variable factory overheadcontrollable variance, fixed factory overhead volume variance, andtotal factory overhead cost variance. Enter a favorable variance asa negative number using a minus sign and an unfavorable variance asa positive number.
| Variable factory overhead controllable variance | $ | |
| Fixed factory overhead volume variance | $ | |
| Total factory overhead cost variance | $ | |
