Question

1. Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis

   Eastern Polymers, 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 4,800 units of product were as follows:

   	Standard Costs		Actual Costs
   Direct materials	6,200 lbs. at $4.6		6,100 lbs. at $4.5
   Direct labor	1,200 hrs. at $18		1,230 hrs. at $18.3
   Factory overhead	Rates per direct labor hr.,
   	based on 100% of normal
   	capacity of 1,250 direct
   	labor hrs.:
   		Variable cost, $4.8	$5,700 variable cost
   		Fixed cost, $7.6	$9,500 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.

   Price variance	$
   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.

   Rate variance	$
   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	$

Answer 1

Hi

Let me know in case you face any issue:

Answers are highlighted in yellow: Instruction says, (-) sign for Favorable and Positive sign for Unfavorable. If it doesn't accept then change the all numbers as positive Solution: a) b) Materials price variance: Standard Price (SP) Actual Price (AP Labor rate variance: Standard Rate (SR) Actual rate (AR S 4.60 S4.50 $18.00 $18.30 Actual Quantity (AQ) Materials price variance (SP- APFActual 61 Actual Hours (AH) Labor rate variance (SR-AR) Actual Hours 1230 S-610 F $369 U Materials quantity/efficiency variance: Standard Quantity (SQ) Actual Quantity (AQ Labor quantity/efficiency variance: Standard Hours (SH) Actual Hours (AH 62 1200 61 1230 S4.60 $-460 F $18.00 $540 U Standard Price (SP Materials quantity variance (SQ-AQ) Standard Standard Rate (SR) Labor time variance (SH-AH) Standard Rate $ -1,070F $909 U Total Direct Material Cost Variance Total Direct Labor cost variance c) Controllable Variance Actual VOH Budgeted VOH 4800*0.25)F4.8 Variable factory OH Controllable Variance 5700 5760 $-60 F Fixed Overhead Vol lume Variance Budgeted Fixed Overhead Fixed Overhead Cost applied (4800 *0.25)7.6 Fixed Overehad Volume variance 9500 9120 $380 U $320 U Total Factory overhead cost variance