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

Adamantane 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 15,000 units of product were as follows:

	Standard Costs		Actual Costs
Direct materials	5,000 lbs. at $50.00		4,950 lbs. at $50.60
Direct labor	3,000 hrs. at $25.00		2,945 hrs. at $25.60
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 3,200 direct
	labor hrs.:
		Variable cost, $5.50	$16,680 variable cost
		Fixed cost, $4.00	$12,800 fixed cost

Each unit requires 0.2 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
Quantity variance	$	Unfavorable
Total direct materials cost variance	$	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.

Rate variance	$	Favorable
Time variance	$	Unfavorable
Total direct labor cost variance	$	Favorable

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.

Variable factory overhead controllable variance	$	Unfavorable
Fixed factory overhead volume variance	$
Total factory overhead cost variance	$