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 70,000 units of product were as follows: Standard Costs Actual Costs Direct materials 189,000 lbs. at $5.00 187,100 lbs. at $4.80 Direct labor 17,500 hrs. at $16.90 17,900 hrs. at $17.10 Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 18,260 direct labor hrs.: Variable cost, $2.90 $50,240 variable cost Fixed cost, $4.60 $83,996 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 $__________ Favorable Direct Materials Quantity Variance $________ Favorable 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. Direct Labor Rate Variance $_______ Unfavorable Direct Labor Time Variance $________ Unfavorable Total Direct Labor Cost Variance $________ Unfavorable 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 $___________ Favorable Fixed factory overhead volume variance $___________ Unfavorable Total factory overhead cost variance $__________ Unfavorable

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 70,000 units of product were as follows: Standard Costs Actual Costs Direct materials 189,000 lbs. at $5.00 187,100 lbs. at $4.80 Direct labor 17,500 hrs. at $16.90 17,900 hrs. at $17.10 Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 18,260 direct labor hrs.: Variable cost, $2.90 $50,240 variable cost Fixed cost, $4.60 $83,996 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 $______ Favorable Direct Materials Quantity Variance $ Favorable 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. Direct Labor Rate Variance $_ Unfavorable Direct Labor Time Variance $ Unfavorable Total Direct Labor Cost Variance $ Unfavorable 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 $_ Favorable Fixed factory overhead volume variance $_ Unfavorable Total factory overhead cost variance $____ Unfavorable

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter9: Evaluating Variances From Standard Costs

Section: Chapter Questions

Problem 3PA: Direct materials, direct labor, and factory overhead cost variance analysis Mackinaw Inc. processes...

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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 70,000 units of product were as follows:

	Standard Costs	Actual Costs
Direct materials	189,000 lbs. at $5.00	187,100 lbs. at $4.80
Direct labor	17,500 hrs. at $16.90	17,900 hrs. at $17.10
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 18,260 direct
	labor hrs.:
		Variable cost, $2.90	$50,240 variable cost
		Fixed cost, $4.60	$83,996 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	$__________	Favorable
Direct Materials Quantity Variance	$________	Favorable
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.

Direct Labor Rate Variance	$_______	Unfavorable
Direct Labor Time Variance	$________	Unfavorable
Total Direct Labor Cost Variance	$________	Unfavorable

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	$___________	Favorable
Fixed factory overhead volume variance	$___________	Unfavorable
Total factory overhead cost variance	$__________	Unfavorable

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