Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis East

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 6,800 units of product were as follows: Standard Costs Actual Costs Direct materials Direct labor Factory overhead 8,800 lbs. at $4.7 1,700 hrs. at $18.3 Rates per direct labor hr., based on 100% of normal capacity of 1,770 direct labor hrs. 8,700 lbs. at $4.6 1,740 hrs. at $18.5 Variable cost, $4.6 $7,740 variable cost Fixed cost, $7.3 $12,921 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. Price variance Quantity variance 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. Rate variance 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

Explanation / Answer

a. Direct Materials Price Variance - $ 870 F Quantity Variance - $ 470 F Total Direct Materials Cost Variance - $ 1,340 F b. Direct Labor Rate Variance $ 348 U Time Variance $ 742 U Total Direct Labor Cost Variance $ 1,090 U c. Variable Factory Overhead Controllable Variance - $ 80 F Fixed Factory Overhead Volume Variance $ 511 U Total Factory Overhead Cost Variance    $ 431 U

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