Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis Mackinaw Inc. processes a base chemical...

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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 manufactu of 6,800 units of product were as follows: Standard Costs Actual Costs Direct materials 8,800 lb. at $4.80 8,700 lb. at $4.70 1,700 hrs. at $16.10 1,740 hrs. at $16.50 Direct labor Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 1,770 direct labor hrs.: $7,410 variable cost Variable cost, $4.40 Fixed cost, $7.00 $12,390 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 Direct materials quantity variance Total direct materials cost variance $1 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 based on 100% of normal capacity of 1,770 direct labor hrs.: $7,410 variable cost Variable cost, $4.40 Fixed cost, $7.00 $12,390 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 Direct materials quantity variance Total direct materials cost variance $1 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 Direct labor time variance Total direct labor cost variance 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 Fixed factory overhead volume variance Total factory overhead cost variance

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Solution a:     Direct Material Cost Variance    Actual Cost      Standard cost for actual quantity      Standard Cost    AQ *  AP =        AQ *  SP =        SQ *  SP =      8700  $4.70  $40,890.00      8700  $4.80  $41,760.00      8800  $4.80  $42,240.00      -$870.00  F        -$480.00  F                Direct Material Price Variance        Direct Material Qty variance          Direct material price variance  -$870.00  F                Direct material quantity variance  -$480.00  F                Direct material cost variance  -$1,350.00  F                Solution b:     Direct Labor Cost Variance    Actual Cost      Standard cost for actual quantity      Standard Cost    AH *  AR =        AH *  SR =        SH *  SR =      1740  $16.50  $28,710.00      1740  $16.10  $28,014.00      1700  $16.10  $27,370.00      $696.00  U        $644.00  U                Direct Labor rate Variance        Direct Labor Efficiency Variance          Direct Labor Rate variance  $696.00  U                Direct Labor Efficiency variance  $644.00  U                Direct labor cost variance  $1,340.00  U                Solution c: Variable factory overhead controllable variance = Actual cost of variable overhead - Standard cost of variable overhead = $7,410 - (1700*$4.40) = - $70 F Fixed factory overhead volume variance = Budgeted fixed overhead - Fixed overhead applied = $12,390 - (1700 * $7) = $490 U Total factory overhead cost variance = - $70 F + $490 U = $420 U.

Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis Mackinaw Inc. processes a base chemical...

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