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

Santiago 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:

Line Item Description	Standard Costs	Actual Costs
Direct materials	175,000 lbs. at $4.80 per lb.	173,300 lbs. at $4.70 per lb.
Direct labor	17,500 hrs. at $16.10 per hr.	17,900 hrs. at $16.40 per hr.
Factory overhead	Rates per direct labor hr., based on 100% of normal capacity of 18,260 direct labor hrs.:
Factory overhead	Variable cost, $3.80	$65,840 variable cost
Factory overhead	Fixed cost, $6.00	$109,560 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.

Line Item Description	Amount	Variance
Direct Materials Price Variance	$fill in the blank 1	FavorableUnfavorable
Direct Materials Quantity Variance	$fill in the blank 3	FavorableUnfavorable
Total Direct Materials Cost Variance	$fill in the blank 5	FavorableUnfavorable

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.

Line Item Description	Amount	Variance
Direct Labor Rate Variance	$fill in the blank 7	FavorableUnfavorable
Direct Labor Time Variance	$fill in the blank 9	FavorableUnfavorable
Total Direct Labor Cost Variance	$fill in the blank 11	FavorableUnfavorable

c. Determine the variable factory overhead controllable variance, 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.

Line Item Description	Amount	Variance
Variable factory overhead controllable variance	$fill in the blank 13	FavorableUnfavorable
Fixed factory overhead volume variance	$fill in the blank 15	FavorableUnfavorable
Total factory overhead cost variance	$fill in the blank 17	FavorableUnfavorable