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 the manufacture of 74,000 units of product were as follows: Standard CostsActual CostsDirect materials199,800 lbs. at $5.00197,800 Ibs. at $4.90Direct labor18,500 hrs. at $17.7018,930 hrs. at $18.00Factory overheadRates per direct labor hr.,based on 100% of normalcapacity of 19,310 directlabor hrs.:Variable cost, $2.90$53,110 variable costFixed cost, $4.60$88,826 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 negative numberusing a minus sign and an unfavorable variance as a positive number.Direct Material Price VarianceDirect Materials Quantity Variance$4Total Direct Materials Cost Varianceb. 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 signand an unfavorable variance as a positive number.Direct Labor Rate VarianceDirect Labor Time VarianceTotal Direct Labor Cost Variancec. Determine variable factory overhead controllable variance, the fixed factory overhead volume variance, and total factory overhead cost variance. Enter a favorable variance asa negative number using a minus sign and an unfavorable variance as a positive number.Variable factory overhead controllable varianceFixed factory overhead volume varianceTotal factory overhead cost variance

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Description: 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 the manufacture of

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FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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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
Actual Costs
Direct materials
199,800 lbs. at $5.00
197,800 Ibs. at $4.90
Direct labor
18,500 hrs. at $17.70
18,930 hrs. at $18.00
Factory overhead
Rates per direct labor hr.,
based on 100% of normal
capacity of 19,310 direct
labor hrs.:
Variable cost, $2.90
$53,110 variable cost
Fixed cost, $4.60
$88,826 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 Material Price Variance
Direct Materials Quantity Variance
$4
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
Direct Labor 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

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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