Direct Materials, Direct Labor, and Factory Overhead Cost Variance AnalysisEastern 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:Standard Costs Actual CostsDirect materials 5,700 lbs. at $4.90 5,600 lbs. at $4.70Direct labor 1,100 hrs. at $18.40 1,130 hrs. at $18.90Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 1,150 direct labor hrs.: Variable cost, $4.80 $5,230 variable costFixed cost, $7.60 $8,740 fixed costEach 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. Price variance $ Quantity variance $ Total direct materials cost variance $

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Business

Ronan Morales

22 March, 15:43

Direct Materials, Direct Labor, and Factory Overhead Cost Variance AnalysisEastern 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:Standard Costs Actual CostsDirect materials 5,700 lbs. at $4.90 5,600 lbs. at $4.70Direct labor 1,100 hrs. at $18.40 1,130 hrs. at $18.90Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 1,150 direct labor hrs.: Variable cost, $4.80 $5,230 variable costFixed cost, $7.60 $8,740 fixed costEach 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. Price variance $ Quantity variance $ Total direct materials cost variance $

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MomBod · Answer 1

Direct material price variance = - $1,120 Favorable

Direct Material Quantity Variance = - $490 Favorable

Total Direct Material Cost Variance = - $1,610 Favorable

Explanation:

The computation of the direct materials price variance, direct materials quantity variance, and total direct materials cost variance is shown below:-

Direct material price variance = (Actual Price - Standard Price) * Actual Quantity

= ($4.70 - $4.90) * 5,600

= - $0.20 * 5,600

= - $1,120 Favorable

Direct Material Quantity Variance = (Actual Quantity - Standard Quantity) * Standard Price

= (5,600 - 5,700) * $4.90

= - 100 * $4.90

= - $490 Favorable

Total Direct Material Cost Variance = Direct material price variance - Direct Material Quantity Variance

= - $1,120 - $490

= - $1,610 Favorable