In: Accounting
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 5,600 units of product were as follows:
Standard Costs | Actual Costs | ||
Direct materials | 7,300 lb. at $4.80 | 7,200 lb. at $4.70 | |
Direct labor | 1,400 hrs. at $18.20 | 1,430 hrs. at $18.50 | |
Factory overhead | Rates per direct labor hr., | ||
based on 100% of normal | |||
capacity of 1,460 direct | |||
labor hrs.: | |||
Variable cost, $4.00 | $5,540 variable cost | ||
Fixed cost, $6.30 | $9,198 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 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 | $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 |