Question

1. 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 70,000 units of product were as follows:

   	Standard Costs		Actual Costs
   Direct materials	238,000 lbs. at $5.20		235,600 lbs. at $5.00
   Direct labor	17,500 hrs. at $18.10		17,900 hrs. at $18.50
   Factory overhead	Rates per direct labor hr.,
   	based on 100% of normal
   	capacity of 18,260 direct
   	labor hrs.:
   		Variable cost, $2.90	$50,240 variable cost
   		Fixed cost, $4.60	$83,996 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	$fill in the blank 1
   Direct Materials Quantity Variance	$fill in the blank 3
   Total Direct Materials Cost Variance	$fill in the blank 5

   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	$fill in the blank 7
   Direct Labor Time Variance	$fill in the blank 9
   Total Direct Labor Cost Variance	$fill in the blank 11

   c. Determine the variable factory overhead controllable variance, 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	$fill in the blank 13
   Fixed factory overhead volume variance	$fill in the blank 15
   Total factory overhead cost variance	$fill in the blank 17

Answer 1