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 4,400 units of product were as follows:

	Standard Costs		Actual Costs
Direct materials	5,700 lb. at $5.60		5,600 lb. at $5.50
Direct labor	1,100 hrs. at $18.10		1,130 hrs. at $18.30
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 1,150 direct
	labor hrs.:
		Variable cost, $4.30	$4,680 variable cost
		Fixed cost, $6.80	$7,820 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 materials price variance	$fill in the blank 1	FavorableUnfavorableFavorable
Direct materials quantity variance	fill in the blank 3	FavorableUnfavorableFavorable
Total direct materials cost variance	$fill in the blank 5	FavorableUnfavorableFavorable

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	FavorableUnfavorableUnfavorable
Direct labor time variance	fill in the blank 9	FavorableUnfavorableUnfavorable
Total direct labor cost variance	$fill in the blank 11	FavorableUnfavorableUnfavorable

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