Direct Materials, Direct Labor, and Factory Overhead Cost Variance AnalysisMackinaw 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 6,800 units of product were as follows: Standard CostsActual CostsDirect materials8,800 lb. at $5.608,700 lb. at $5.50Direct labor1,700 hrs. at $18.501,740 hrs. at $18.70Factory overheadRates per direct labor hr., based on 100% of normal capacity of 1,770 direct labor hrs.: Variable cost, $4.10$6,900 variable cost Fixed cost, $6.50$11,505 fixed costEach unit requires 0.25 hour of direct labor. a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as anegative number using a minus sign and an unfavorable variance as a positive number.Direct materials price varianceDirect materials quantity varianceTotal direct materials cost varianceb. 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 aminus sign and an unfavorable variance as a positive number.Direct labor rate varianceDirect labor time varianceTotal direct labor cost variancec. Determine variable factory overhead controllable variance, the fixed factory overhead volume variance, and total factory overhead cost variance. Enter afavorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.Variable factory overhead controllable varianceFixed factory overhead volume varianceTotal factory overhead cost variance

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Description: Direct Materials, Direct Labor, and Factory Overhead Cost Variance AnalysisMackinaw 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

Answer a: Direct materials price variance: =AQ×(AR-SR)=8700×($5.50-$5.60)=$870(F) Direct materials…

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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 6,800 units of product were as follows:

	Standard Costs	Actual Costs
Direct materials	8,800 lb. at $5.60	8,700 lb. at $5.50
Direct labor	1,700 hrs. at $18.50	1,740 hrs. at $18.70
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 1,770 direct
	labor hrs.:
		Variable cost, $4.10	$6,900 variable cost
		Fixed cost, $6.50	$11,505 fixed cost

Each unit requires 0.25 hour of direct labor.

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
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

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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