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 74,000 units of product were as follows:

	Standard Costs		Actual Costs
Direct materials	207,200 lbs. at $4.90		205,100 lbs. at $4.70
Direct labor	18,500 hrs. at $16.90		18,930 hrs. at $17.10
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 19,310 direct
	labor hrs.:
		Variable cost, $4.50	$82,420 variable cost
		Fixed cost, $7.10	$137,101 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	$fill in the blank 1	Favorable
Direct Materials Quantity Variance	$fill in the blank 3	Favorable
Total Direct Materials Cost Variance	$fill in the blank 5	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	$fill in the blank 7	Unfavorable
Direct Labor Time Variance	$fill in the blank 9	Unfavorable
Total Direct Labor Cost Variance	$fill in the blank 11	Unfavorable

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	Favorable
Fixed factory overhead volume variance	$fill in the blank 15	Unfavorable
Total factory overhead cost variance	$fill in the blank 17	Unfavorable

2. Abbeville Fixture Company manufactures units in a small manufacturing facility. The units are made from brass. Manufacturing has 30 employees. Each employee presently provides 40 hours of labor per week. Information about a production week is as follows:

Standard wage per hour	$11.4
Standard labor time per unit	20 min.
Standard number of lbs. of brass	1.4 lbs.
Standard price per lb. of brass	$13
Actual price per lb. of brass	$13.25
Actual lbs. of brass used during the week	8,652 lbs.
Number of units produced during the week	6,000
Actual wage per hour	$11.74
Actual hours for the week (30 employees 40 hours)	1,200 hrs.

Required:

a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places.

Direct materials standard cost per unit	$fill in the blank 1
Direct labor standard cost per unit	$fill in the blank 2
Total standard cost per unit	$fill in the blank 3

b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Round your answers to the nearest whole dollar. 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 4	Unfavorable
Direct Materials Quantity Variance	$fill in the blank 6	Unfavorable
Total Direct Materials Cost Variance	$fill in the blank 8	Unfavorable

c. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Round your answers to the nearest whole dollar. 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 10	Unfavorable
Direct Labor Time Variance	$fill in the blank 12	Favorable
Total Direct Labor Cost Variance	$fill in the blank 14	Favorable