Question: Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis
Eastern 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 5,200 units of product were as follows:
|
Standard Costs |
Actual Costs |
| Direct materials |
6,800 lbs. at $5.7 |
6,700 lbs. at $5.5 |
| Direct labor |
1,300 hrs. at $17.3 |
1,330 hrs. at $17.7 |
| Factory overhead |
Rates per direct labor hr., |
|
|
based on 100% of normal |
|
|
capacity of 1,360 direct |
|
|
labor hrs.: |
|
|
|
Variable cost, $4.5 |
$5,790 variable cost |
|
|
Fixed cost, $7.1 |
$9,656 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.
| Price variance |
$ |
|
| 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.
| Rate variance |
$ |
|
| 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 |
$ |
|