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 |
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