Question

Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis 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 70,000 units of product were as follow Actual Costs Direct materials Direct labor Factory overhead Standard Costs 224,000 lbs. at $4.90 17,500 hrs. at $16.20 Rates per direct labor hr.. based on 100% of normal 221,800 lbs. at $4.70 17,900 hrs. at $16.60 capacity of 18,250 direct labor hrs. Variable cost $4.30 $74,500 variable cost $124,168 fixed cost Faced cost, $6.80 Each unit requires 0.25 hour of direct labor.

Answer 1

variable factory overhead Contvollabe Variance Actual variable xpenses Standard variabe expenses ,500 = Standayd Yate X actual hys Nayiabe expenses 4.30 X 1,900 670 variable factory overhead contro Ua ble variance Standard expensesActal exponses 76,0 $2470 CF) $74,500 ND Jume variance g Fixed fautory over head 18,260 hours NoYMal Capacity hours = Stomdard hours charged to actal pre duution 17,500 Fixed autoy overhead volume vavmce Fixed averhedd rae x (Actal - Budgeted) es [ 48 260-1,500 68 x 5168 (v)

Total tactory dverhead Cost variance = Variable contvollable Vanance + fixed volume vavlane 2470 F) t $5168 (U) 2698 (U) F- Faworable V= un Favorable 11