Direct materials, direct labor, and factory overhead cost variance analysis Specialty Polymers, 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 19,000 units of product were as follows:
Standard Costs Actual Costs
Direct materials 2,500 lbs. at $8.10 2,440 lbs. at $8.30
Direct labor 3,800 hrs. at $17.50 3,750 hrs. at $17.68
Factory overhead Rates per direct labor hr.,
based on 100% of normal
capacity of 3,900 direct
labor hrs.:
Variable cost, $2.20 $8,100 variable cost
Fixed cost, $3.50 $13,650 fixed cost
Each unit requires 0.2 hour of direct labor.
Instructions
Determine (a) the price variance, quantity variance, and total direct materials cost variance;
(b) the rate variance, time variance, and total direct labor cost variance; and (c) variable factory overhead controllable variance, the fixed factory overhead volume variance, and total factory overhead cost variance.