Direct Materials, Direct Laboc, and Fectory Overhesd Cost Verience Analysis a ba

Question

Direct Materials, Direct Laboc, and Fectory Overhesd Cost Verience Analysis a base chemical into plastic. Stendard costs and actual costs for direct maberials, direct iebor, and fectory overhead incurred for the manufacture of 5,600 nits of sroduct were as fotows materials 7,300 ibs. at $570 1,400 hrs. at S16.40 7,200 lbs at $5.60 1430 rs. at $16.80 Direct laber Fectory overhead Rates per direct lebor hr. based on 100% of normal Verieble cost, $4.20 $5,820 variable cost Flxed cost, $6.60 636 fixed cost Each u requires 0.25 hour of direct labor, Required Quantity varlance direct materials cost variance Time variance Select direct labor cost and an unwst" wane e. Determine variable factory overhead contrelable variance, the fxed factory overhead volume varianee, and total as a positive Variable factory overhead controlable variance Fixed fectory overhead volume variance Total factory overhead cost variance factory overhead eest vanane, enter favorable variance as . Myn-mrber using * Check My

Explanation / Answer

a Material Variance Price Variance =AQ*(SR-AR)=7200*(5.70-5.60) -720 Favorable Quantity Variance =(SQ-AQ)*SR=(7300-7200)*5.70 -570 Favorable Total Direct Material Cost Variance -1290 Favorable b Direct Labor Rate Variance =AH*(AR-SR)=1430*(16.80-16.40) 572 Unfavorable Time Varaince =(AH-SH)*SR =(1430-1400)*16.40 492 Unfavorable Total Direct labor Cost Variance 1064 Unfavorable c Variable Factory overhead contollable variance Actual variable factory overhead cost incurred. 5820 Budgeted variable factory overhead for1400*4.20 5880 -60 Favorable Fixed factory overhead volume variance: Normal capacity at 100%. 1460 Standard for amount produced 1400 Productive capacity not used. 60 Standard fixed factory overhead cost rate. 6.6 Variance—unfavorable 60*6.6 396 Unfavorable Total factory overhead cost variance—unfavorable. 336 Unfavorable

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