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 5,600 units of product were as follows:

	Standard Costs		Actual Costs
Direct materials	7,300 lbs. at $5.00		7,200 lbs. at $4.90
Direct labor	1,400 hrs. at $17.70		1,430 hrs. at $18.10
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 1,460 direct
	labor hrs.:
		Variable cost, $3.50	$4,850 variable cost
		Fixed cost, $5.50	$8,030 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	$	Favorable or Unfavorable
Quantity variance	$	Favorable or Unfavorable
Total direct materials cost variance	$	Favorable or Unfavorable

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	$	Favorable or Unfavorable
Time variance	$	Favorable or Unfavorable
Total direct labor cost variance	$	Favorable or 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	$	Favorable or Unfavorable
Fixed factory overhead volume variance	$	Favorable or Unfavorable
Total factory overhead cost variance	$	Favorable or Unfavorable