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 78,000 units of product were as follows: Standard Costs Actual Costs 249,600 lbs. at $4.80 19,500 hrs. at $17.50 Rates per direct labor hr., based on 100% of normal capacity of 20,350 direct labor hrs.: Variable cost, $4.80 Fixed cost, $7.60 Each unit requires D.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 Direct labor Factory overhead $ $ S Variable factory overhead controllable variance Fixed factory overhead volume variance Total factory overhead cost variance 247,100 lbs. at $4.70 19,950 hrs, at $17.70 Direct Material 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 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. S $92,660 variable cost $154,660 fixed cost Favorable Favorable Favorable S S Favorable Unfavorable 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 78,000 units of product were as follows: Standard Costs Actual Costs 249,600 lbs. at $4.80 19,500 hrs. at $17.50 Rates per direct labor hr., based on 100% of normal capacity of 20,350 direct labor hrs.: Variable cost, $4.80 Fixed cost, $7.60 Each unit requires D.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 Direct labor Factory overhead $ $ S Variable factory overhead controllable variance Fixed factory overhead volume variance Total factory overhead cost variance 247,100 lbs. at $4.70 19,950 hrs, at $17.70 Direct Material 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 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. S $92,660 variable cost $154,660 fixed cost Favorable Favorable Favorable S S Favorable Unfavorable Unfavorable ✓ ✓ ✓ ✓
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text: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 78,000 units of product were as follows:
Standard Costs
Actual Costs
249,600 lbs. at $4.80
19,500 hrs. at $17.50
Rates per direct labor hr.,
based on 100% of normal
capacity of 20,350 direct
labor hrs.:
Variable cost, $4.80
Fixed cost, $7.60
Each unit requires D.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
Direct labor
Factory overhead
$
$
S
Variable factory overhead controllable variance
Fixed factory overhead volume variance
Total factory overhead cost variance
247,100 lbs. at $4.70
19,950 hrs, at $17.70
Direct Material 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
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.
S
$92,660 variable cost
$154,660 fixed cost
Favorable
Favorable
Favorable
S
S
Favorable
Unfavorable
Unfavorable
✓
✓
✓
✓
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