Question

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 7,200 units of product were as follows: Standard Costs Actual Costs 9,300 lb. at $5.60 1,840 hrs. at $18.10 Direct materials 9,400 lb. at $5.80 Direct labor 1,800 hrs. at $17.80 Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 1,880 direct labor hrs.: Variable cost, $4.80 Fixed cost, $7.60 Each unit requires 0.25 hour of direct labor. Required: $8,550 variable cost $14,288 fixed cost 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 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 s 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

Answer 1

Direct Material Price Variance =			(Standard Price - Actual Price) x Actual Quantity
		=	($ 5.80 - $ 5.60) x 9300
		=	$ 1,860.00	(F)
Direct Material Quan. Variance =			(Standard Quantity - Actual Quantity) x Standard Price
		=	(9400 - 9300) x $ 5.80
		=	$    580.00	(F)
Direct Labor Cost Variance =			Standard Cost - Actual Cost
		=	(9400 x $ 5.80) - (9300 x $ 5.60)
		=	$ 2,440.00	(F)

Direct Labor Rate Variance =			(Standard Rate - Actual Rate) x Actual Hours
		=	($ 17.80 - $ 18.10) x 1840
		=	$    552.00	(U)
Direct Labor Time Variance =			(Standard Hours - Actual Hours) x Standard Rate
		=	(1800 - 1840) x $ 17.8
		=	$    712.00	(U)
Direct Labor Cost Variance =			Standard Cost - Actual Cost
		=	(1800 x $ 17.80) - (1840 x $ 18.10)
		=	$ 1,264.00	(U)

Variable factory overhead controllable variance
Actual variable expenses			=	$ 8,550.00
Standard Variable expenses			=	Standard rate of variable expenses x Actual hours
			=	$ 4.8 x 1840
			=	$ 8,832.00
Variable factory overhead controllable variance					=	$ 8550 - $ 8832
					=	$ 282.00	(U)

Fixed factory overhead volume variance
Normal capacity hours					=	1880	hours
Standard hours charged to actual production					=	1800	hours
Fixed volume variance					=	(1880 - 1800) x $ 7.60
					=	$ 608.00	(F)

Total factory overhead cost variance					=	Total standard overhead cost- Total actual overhead cost
					=	($ 8832 + $ 13680) - ($ 8550 + $ 14288)
					=	$ 326.00	(U)