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ⒸPR 8-3A Direct materials, direct labor, and factory overhead cost variance analysis Obj. 3, 4 Mackinaw 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 40,000 units of product were as follows: EXCEL TEMPLATE Standard Costs Actual Costs 118,500 lbs. at $3.25 per lb. Direct materials Direct labor 11,700 hrs. at $25.00 per hr. Factory overhead 120,000 lbs. at $3.20 per lb. 12,000 hrs. at $24.40 per hr. Rates per direct labor hr., based on 100% of normal capacity of 15,000 direct labor hrs.: Variable cost, $8.00 $91,200 variable cost $150,000 fixed cost Fixed cost, $10.00 Each unit requires 0.3 hour of direct labor. Instructions Determine (A) the direct materials price variance, direct materials quantity variance, and total direct materials cost variance; (B) the direct labor rate variance, direct labor time variance, and total direct labor cost variance; and (C) the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance. Answer Check Figure: C. Controllable variance, $(4,800) F
Instructions Answers are entered in the cells with gray backgrounds. Cells with non-gray backgrounds are protected and cannot be edited. An asterisk (*) will appear to the right of an incorrect entry. Enter a zero in cells you would otherwise leave blank. A. Direct Materials Cost Variance Price variance: Actual price Standard price Variance Actual quantity Quantity variance: Actual quantity Standard quantity Variance Standard price Total direct materials cost variance Direct materials price variance Direct materials price variance ==
B. Rate variance: Actual rate per hour Standard rate per hour Variance Actual hours Direct labor rate variance Time variance: Actual direct labor hours Standard direct labor hours Variance Standard rate per hour Direct labor time variance Total direct labor cost variance Direct Labor Cost Variance X X
C. Factory Overhead Cost Variance Variable factory overhead controllable variance: Actual variable FO cost incurred Budgeted variable FO cost for 12,000 hrs. Variance Fixed factory overhead volume variance: Hours at normal capacity Standard hours for amount produced Productive capacity not used Standard fixed FO cost rate Variance Total factory overhead cost variance ==
Alternative Computation of Overhead Variances: Actual costs Balance Actual Factory Overhead Controllable Variance Factory Overhead Budgeted Factory Overhead for Amount Produced Variable cost Fixed cost Total Total Factory Overhead Cost Variance Applied costs Volume Variance Applied Factory Overhead