Question

Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis Mackinaw Inc. processes a base chemical into plastic. Standard cests and actual costs for direct materials, direct labor, and factory overhead inoumed for the manufacture of 7,600 units of product were as fullows Standard Costs Actual Conts Direct materials 9,900 lb, at $5.70 9,800 at $5.60 Direct laber 1,900 hrs at $16.70 1,940 hes. at $16.90 Rates per direct labor he Factory overhead based on 100% of normal capadity of 1,98o direct labor brs Variable cost, $4.30 $8.090 variable cost Fsed cost, $6.80 $13,464 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 varlance as a negative number using a minus sign and an unfavorable variance as a positive number Direct materials price variance Favorable -980 Direct materials quantity variance -570 Favorable Total direct materials cost variance 1,550 Favorable 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 388 Unfavorable Direct labor time variance এa Unfavorable Total direct labor cost variance 1,056 Unfavorable c Determine variable factory overhead controllable variance, the fixed factory overhead volume varlance, and total factory overhead cost varlance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a postive number variable factory overhead controllable variance -252 Favorable Fixed factory overhead velume variance -272 Unfavorable 464 Unfayorable Total factory overhead cost variance

Answer 1

Direct material price variance = 9800*(5.60-6.70)= - 980

Direct material quantity variance= 5.70*(9800-9900)= -570

Total direct material cost variance= (9900*5.70)-(9800*5.60)= -1550

Direct labour price variance = 1940*(16.9-16.7)= 388

Direct labour time variance = 16.70*(1940-1900)= 668

Total direct labour cost variance = (1940-1900)*(16.9-16.7)= 1056

Variable Factory overhead controllable variance = (1940*4.3)- 8090= 252

Fixed factory overhead variance= (1980-1940)*6.8= - 272

Total factory overhead variance = (8090+13464)- (1900*11.1)= - 464