Question

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 74,000 units of product were as follows: Standard Costs Actual Costs Direct materials 185,000 lbs. at $6.00 183,200 lbs. at $5.80 Direct labor 18,500 hrs. at $16.50 18,930 hrs. at $16.90 Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 19,310 direct labor hrs.: Variable cost, $3.10 $56,780 variable cost Fixed cost, $4.90 $94,619 fixed cost Each unit requires 0.25 hour of direct labor. Required:

Answer 1

Answer:

You are missing the requirements. I looked them up and found the following:

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.

                                   Standard Costs                  Actual Costs

Direct materials      185,000 lbs. at $6.00     183,200 lbs. at $5.80

Direct labor             18,500 hrs. at $16.50      18,930 hrs. at $16.90

Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 19,310 direct labor hrs.:

Variable cost,                       $3.10                          $56,780

variable cost Fixed cost,     $4.90                         $94,619 fixed cost

Each unit requires     0.25 hours of direct labor

direct materials price variance = AQ x (AP - SP) = 183,200 x ($5.80 - $6) = -$36,640 favorable variance

direct materials quantity variance = SP x (AQ - SQ) = $6 x (183,200 - 185,000) = -$10,800 favorable variance

total direct materials cost variance = (AQ X AP) - (SQ X SP) = (183,200 X $5.80) - (185,000 X $6) = $1,062,560 - $1,110,000 = -$47,440 favorable variance

or

total direct materials cost variance = direct materials price variance + direct materials quantity variance = -$36,640 - $10,800 = -$47,440 favorable variance