Question

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 $

Answer 1

Direct material price variance = -$1,120 Favorable

Direct Material Quantity Variance = -$490 Favorable

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

Step-by-step 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