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 5,600 units of product were as follows:
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Standard Costs |
Actual Costs |
| Direct materials |
7,300 lbs. at $5.80 |
7,200 lbs. at $5.60 |
| Direct labor |
1,400 hrs. at $17.70 |
1,430 hrs. at $18.20 |
| Factory overhead |
Rates per direct labor hr., |
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| |
based on 100% of normal |
|
| |
capacity of 1,460 direct |
|
| |
labor hrs.: |
|
| |
|
Variable cost, $3.30 |
$4,570 variable cost |
| |
|
Fixed cost, $5.20 |
$7,592 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.
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.
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.