Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis East
ID: 2592715 • Letter: D
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 4,400 units of product were as follows:
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.
Standard Costs Actual Costs Direct materials 6,200 lbs. at $6.00 6,100 lbs. at $5.90 Direct labor 1,100 hrs. at $17.50 1,130 hrs. at $17.90 Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 1,150 direct labor hrs.: Variable cost, $4.20 $4,570 variable cost Fixed cost, $6.60 $7,590 fixed costExplanation / Answer
a)
Price Variance = Change in Price*Actual quantity
= (6-5.90)*6100 = 610 F
Quantity Variane = Change in quantity*Standard price
= (6200-6100)*6 = 600 F
Total direct materials cost variance = 6200*6 - 6100*5.90 = 37200 - 35990 = 1210 F
b)
Rate Variance = Change in rate*Actual hours
= (17.90 - 17.50)*1130 = 452 U
Time Variance = Change in quantity*Standard rate
= (1130 -1100)*17.50 = 30*17.50 = 525 U
Total direct labor cost variance = 1130*17.90 -1100*17.50 = 20227 - 19250 =977U
c)
Variable factory overhead controllable variance = 1150*4.20 - 4570 = 4830 - 4570 = 260F
Fixed factory overhead volume variance = 1150*6.60 - 7590 = 7590 - 7590 = 0
Variable factory overhead controllable variance = 1150*4.20 - 4570 = 4830 - 4570 = 260F
Fixed factory overhead volume variance = 1150*6.60 - 7590 = 7590 - 7590 = 0
Total factory overhead cost variance = 260 + 0 = 260 FRelated Questions
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