Determine the variances for A, B, and C. 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 themanufacture of 4,400 units of product were as follows:Standard CostsActual CostsDirect materials5,700 Ib. at $5.705,600 Ib. at $5.50Direct labor1,100 hrs. at $17.901,130 hrs. at $18.20Factory overheadRates per direct labor hr.,based on 100% of normalcapacity of 1,150 directlabor hrs.:Variable cost, $4.40$4,790 variable costFixed cost, $7.00$8,050 fixed costEach 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 negativenumber using a minus sign and an unfavorable variance as a positive number.Direct materials price varianceFavorableDirect materials quantity varianceFavorableTotal direct materials cost varianceFavorable 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 aminus sign and an unfavorable variance as a positive number.Direct labor rate varianceUnfavorableDirect labor time varianceUnfavorableTotal direct labor cost varianceUnfavorablec. Determine variable factory overhead controllable variance, the fixed factory overhead volume variance, and total factory overhead cost variance. Enter a favorablevariance as a negative number using a minus sign and an unfavorable variance as a positive number.Variable factory overhead controllable varianceFavorableFixed factory overhead volume varianceUnfavorableTotal factory overhead cost varianceUnfavorable

Actual Quantity (AQ)= 5,600 units Standard Quantity(SQ) = 5,700 units Actual Price(AP) = $ 5.50…

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 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 Favorable Fixed factory overhead volume variance Unfavorable Total factory overhead cost variance Unfavorable

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 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 Favorable Fixed factory overhead volume variance Unfavorable Total factory overhead cost variance Unfavorable

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Determine the variances for A, B, and C.

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 4,400 units of product were as follows:
Standard Costs
Actual Costs
Direct materials
5,700 Ib. at $5.70
5,600 Ib. at $5.50
Direct labor
1,100 hrs. at $17.90
1,130 hrs. at $18.20
Factory overhead
Rates per direct labor hr.,
based on 100% of normal
capacity of 1,150 direct
labor hrs.:
Variable cost, $4.40
$4,790 variable cost
Fixed cost, $7.00
$8,050 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 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
Favorable
Fixed factory overhead volume variance
Unfavorable
Total factory overhead cost variance
Unfavorable

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