1. eBook

   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 7,600 units of product were as follows:

   	Standard Costs		Actual Costs
   Direct materials	9,900 lb. at $5.80		9,800 lb. at $5.60
   Direct labor	1,900 hrs. at $17.30		1,940 hrs. at $17.60
   Factory overhead	Rates per direct labor hr.,
   	based on 100% of normal
   	capacity of 1,980 direct
   	labor hrs.:
   		Variable cost, $4.80	$9,030 variable cost
   		Fixed cost, $7.60	$15,048 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.

   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.

   Direct labor rate variance		Favorable or Unfavorable
   Direct labor time variance		Favorableable or Unfavorable
   Total direct labor cost variance		Favorable or Unfavorable

   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.

   Variable factory overhead controllable variance		Favorable or Unfavorable
   Fixed factory overhead volume variance		Favorable or Unfavorable
   Total factory overhead cost variance		Favorable or Unfavorable