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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 74,000 units of product were as follows: Standard Costs Direct materials Direct labor Factory overhead 222,000 lbs. at $6.00 18,500 hrs. at $17.20 Rates per direct labor hr., based on 100% of normal capacity of 19,310 direct labor hrs.: Variable cost, $4.70 Fixed cost, $7.40 Each unit requires 0.25 hour of direct labor. Required: Direct Labor Time Variance 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 Material Price Variance Direct Materials Quantity Variance Favorable Favorable -✓ Favorable ✓ 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 sig and an unfavorable variance as a positive number. Direct Labor Rate Variance Actual Costs 219,800 lbs. at $5.90 18,930 hrs. at $17.50 Variable factory overhead controllable variance $86,080 variable cost $142,894 fixed cost Fixed factory overhead volume variance Unfavorable Unfavorable Unfavorable ✓ ✓ - ✓ 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 a negative number using a minus sign and an unfavorable variance as a positive number. 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 74,000 units of product were as follows: Standard Costs Direct materials Direct labor Factory overhead 222,000 lbs. at $6.00 18,500 hrs. at $17.20 Rates per direct labor hr., based on 100% of normal capacity of 19,310 direct labor hrs.: Variable cost, $4.70 Fixed cost, $7.40 Each unit requires 0.25 hour of direct labor. Required: Direct Labor Time Variance 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 Material Price Variance Direct Materials Quantity Variance Favorable Favorable -✓ Favorable ✓ 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 sig and an unfavorable variance as a positive number. Direct Labor Rate Variance Actual Costs 219,800 lbs. at $5.90 18,930 hrs. at $17.50 Variable factory overhead controllable variance $86,080 variable cost $142,894 fixed cost Fixed factory overhead volume variance Unfavorable Unfavorable Unfavorable ✓ ✓ - ✓ 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 a negative number using a minus sign and an unfavorable variance as a positive number. Favorable Unfavorable Unfavorable ✓ ✓ ✓

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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 74,000 units of product were as follows: Standard Costs Direct materials Direct labor Factory overhead 222,000 lbs. at $6.00 18,500 hrs. at $17.20 Rates per direct labor hr., based on 100% of normal capacity of 19,310 direct labor hrs.: Required: Variable cost, $4.70 Fixed cost, $7.40 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 Material Price Variance Direct Materials Quantity Variance Total Direct Materials Cost Variance Direct Labor Rate Variance Direct Labor Time Variance Actual Costs 219,800 lbs. at $5.90 18,930 hrs. at $17.50 Total Direct Labor Cost Variance $86,080 variable cost $142,894 fixed cost 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. Variable factory overhead controllable variance Fixed factory overhead volume variance Total factory overhead cost variance $ Favorable Favorable Favorable $ $ Unfavorable Unfavorable 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. Favorable ✓ Unfavorable ✓ Unfavorable ✓ ✓ ✓ ✓ ✓
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 74,000 units of product were as follows: Standard Costs Direct materials Direct labor Factory overhead 222,000 lbs. at $6.00 18,500 hrs. at $17.20 Rates per direct labor hr., based on 100% of normal capacity of 19,310 direct labor hrs.: Required: Variable cost, $4.70 Fixed cost, $7.40 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 Material Price Variance Direct Materials Quantity Variance Total Direct Materials Cost Variance Direct Labor Rate Variance Direct Labor Time Variance Actual Costs 219,800 lbs. at $5.90 18,930 hrs. at $17.50 Total Direct Labor Cost Variance $86,080 variable cost $142,894 fixed cost 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. Variable factory overhead controllable variance Fixed factory overhead volume variance Total factory overhead cost variance $ Favorable Favorable Favorable $ $ Unfavorable Unfavorable 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. Favorable ✓ Unfavorable ✓ Unfavorable ✓ ✓ ✓ ✓ ✓
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