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

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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 6,000 units of product were as follows:

	Standard Costs		Actual Costs
Direct materials	7,800 lb. at $5.30		7,700 lb. at $5.20
Direct labor	1,500 hrs. at $16.20		1,530 hrs. at $16.60
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 1,560 direct
	labor hrs.:
		Variable cost, $4.70	$6,980 variable cost
		Fixed cost, $7.40	$11,544 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	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.

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