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 5,600 units ofproduct were as follows:
| Standard Costs | Actual Costs |
| Direct materials | 7,300 lb. at $5.50 | 7,200 lb. at $5.40 |
| Direct labor | 1,400 hrs. at $18.60 | 1,430 hrs. at $18.80 |
| Factory overhead | Rates per direct labor hr., | |
| based on 100% of normal | |
| capacity of 1,460 direct | |
| labor hrs.: | |
| | Variable cost, $3.20 | $4,440 variable cost |
| | Fixed cost, $5.10 | $7,446 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 variable factory overheadcontrollable variance, the fixed factory overhead volume variance,and total factory overhead cost variance. Enter a favorablevariance as a negative number using a minus sign and an unfavorablevariance as a positive number.
| Variable factory overhead controllable variance | $ | |
| Fixed factory overhead volume variance | | |
| Total factory overhead cost variance | $ | |
