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Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis Mackinaw Inc. processes a base chemical...

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 $5.10
Direct labor 17,500 hrs. at $17.00 17,900 hrs. at $17.20
Factory overhead Rates per direct labor hr.,
based on 100% of normal
capacity of 18,260 direct
labor hrs.:
Variable cost, $4.60 $79,700 variable cost
Fixed cost, $7.30 $133,298 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 Material 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 sign and an unfavorable variance as a positive number.

Direct Labor Rate Variance $
Direct Labor Time Variance $
Total Direct Labor Cost Variance $

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 $
Fixed factory overhead volume variance $
Total factory overhead cost variance $

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