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 6,800 units of product were as follows:
|
Standard Costs |
Actual Costs |
| Direct materials |
8,800 lbs. at $4.70 |
8,700 lbs. at $4.50 |
| Direct labor |
1,700 hrs. at $17.50 |
1,740 hrs. at $17.80 |
| Factory overhead |
Rates per direct labor hr., |
|
|
based on 100% of normal |
|
|
capacity of 1,770 direct |
|
|
labor hrs.: |
|
|
|
Variable cost, $3.50 |
$5,890 variable cost |
|
|
Fixed cost, $5.50 |
$9,735 fixed cost |
Each unit requires 0.25 hour of direct labor.
Required:
a. Determine the price variance, quantity variance, and total direct materials cost variance. Use the minus sign to enter favorable variances as negative numbers.
| Price variance: |
$ |
SelectFavorableUnfavorableItem 2 |
| Quantity variance: |
$ |
SelectFavorableUnfavorableItem 4 |
| Total direct materials cost variance: |
$ |
SelectFavorableUnfavorableItem 6 |
b. Determine the rate variance, time variance, and total direct labor cost variance. Use the minus sign to enter favorable variances as negative numbers.
| Rate variance: |
$ |
SelectFavorableUnfavorableItem 8 |
| Time variance: |
$ |
SelectFavorableUnfavorableItem 10 |
| Total direct labor cost variance: |
$ |
SelectFavorableUnfavorableItem 12 |
c. Determine variable factory overheadControllable Variance, the fixed factory overheadvolume variance, and total factory overhead cost variance. Use the minus sign to enter favorable variances as negative numbers.
| Variable factory overhead controllable variance: |
$ |
SelectFavorableUnfavorableItem 14 |
| Fixed factory overhead volume variance: |
$ |
SelectFavorableUnfavorableItem 16 |
| Total factory overhead cost variance: |
$ |
SelectFavorableUnfavorableItem 18 |