FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Direct Materials, Direct Labor, and Factory
Santiago Inc. processes a base chemical into plastic.
| Line Item Description | Standard Costs | Actual Costs |
|---|---|---|
| Direct materials | 195,000 lbs. at $5.50 per lb. | 193,100 lbs. at $5.40 per lb. |
| Direct labor | 19,500 hrs. at $16.80 per hr. | 19,950 hrs. at $17.10 per hr. |
| Factory overhead | Rates per direct labor hr., based on 100% of normal capacity of 20,350 direct labor hrs.: | |
| Factory overhead | Variable cost, $2.90 | $55,980 variable cost |
| Factory overhead | Fixed cost, $4.60 | $93,610 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.
| Line Item Description | Amount | Variance |
|---|---|---|
| Direct Materials Price Variance |
FavorableUnfavorable |
|
| Direct Materials Quantity Variance |
FavorableUnfavorable |
|
| Total Direct Materials Cost Variance |
FavorableUnfavorable |
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.
| Line Item Description | Amount | Variance |
|---|---|---|
| Direct Labor Rate Variance |
FavorableUnfavorable |
|
| Direct Labor Time Variance |
FavorableUnfavorable |
|
| Total Direct Labor Cost Variance |
FavorableUnfavorable |
c. Determine the variable factory overhead controllable variance, 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.
| Line Item Description | Amount | Variance |
|---|---|---|
| Variable factory overhead controllable variance |
FavorableUnfavorable |
|
| Fixed factory overhead volume variance |
FavorableUnfavorable |
|
| Total factory overhead cost variance |
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