Answered

Find answers to your most challenging questions with the help of IDNLearn.com's experts. Discover in-depth and reliable answers to all your questions from our knowledgeable community members who are always ready to assist.

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 40,000 units of product were as follows:

\textbf{Standard Costs and Actual Costs}
\begin{tabular}{lll}
\hline
& \textbf{Standard Costs} & \textbf{Actual Costs} \\
\hline
Direct materials & 120,000 lb. at [tex]$\$[/tex] 3.20[tex]$ & 118,500 lb. at $[/tex]\[tex]$ 3.25$[/tex] \\
Direct labor & 12,000 hrs. at [tex]$\$[/tex] 24.40[tex]$ & $[/tex]\[tex]$ \square$[/tex] \\
Factory overhead & Rates per direct labor hr., based on 100\% of normal capacity of 15,000 direct labor hrs.: & \\
& Variable cost, [tex]$\$[/tex] 8.00[tex]$ & $[/tex]\[tex]$ 91,200$[/tex] variable cost \\
& Fixed cost, [tex]$\$[/tex] 10.00[tex]$ & $[/tex]\[tex]$ 150,000$[/tex] fixed cost \\
\end{tabular}

Each unit requires 0.3 hours of direct labor.

\textbf{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.

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.

Direct labor rate variance:
[tex]$\$[/tex][tex]$ $[/tex]\square[tex]$ Unfavorable $[/tex]\checkmark$

Sagot :

GinnyAnsweridn
Let's break down the problem step-by-step to find the required variances:

### a. Direct Materials Variance Calculation

1. Direct Materials Price Variance:
- Formula: [tex]\((\text{Actual cost per lb} - \text{Standard cost per lb}) \times \text{Actual quantity}\)[/tex]
- Calculation: [tex]\((\$3.25 - \$3.20) \times 118,500 \text{ lb}\)[/tex]
- Result: [tex]\( \$0.05 \times 118,500 = \$5,925 \)[/tex] (Unfavorable)

2. Direct Materials Quantity Variance:
- Formula: [tex]\((\text{Actual quantity} - \text{Standard quantity}) \times \text{Standard cost per lb}\)[/tex]
- Calculation: [tex]\((118,500 \text{ lb} - 120,000 \text{ lb}) \times \$3.20\)[/tex]
- Result: [tex]\(-1,500 \text{ lb} \times \$3.20 = -\$4,800 \)[/tex] (Favorable)

3. Total Direct Materials Cost Variance:
- Formula: [tex]\(\text{Materials Price Variance} + \text{Materials Quantity Variance}\)[/tex]
- Calculation: [tex]\( \$5,925 + (-\$4,800) \)[/tex]
- Result: \[tex]$1,125 \( \) (Unfavorable) ### b. Direct Labor Variance Calculation 1. Direct Labor Rate Variance: - Formula: \((\text{Actual rate per hr} - \text{Standard rate per hr}) \times \text{Actual hours}\) - Calculation: \((\$[/tex]24.40 - \[tex]$24.40) \times 12,000 \text{ hrs}\) - Result: \( \$[/tex]0 \times 12,000 = \[tex]$0 \) (No Variance) 2. Direct Labor Time Variance: - Formula: \((\text{Actual hours} - \text{Standard hours}) \times \text{Standard rate per hr}\) - Calculation: \((12,000 \text{ hrs} - 12,000 \text{ hrs}) \times \$[/tex]24.40\)
- Result: [tex]\(0 \text{ hrs} \times \$24.40 = \$0\)[/tex] (No Variance)

3. Total Direct Labor Cost Variance:
- Formula: [tex]\(\text{Labor Rate Variance} + \text{Labor Time Variance}\)[/tex]
- Calculation: [tex]\( \$0 + \$0\)[/tex]
- Result: \[tex]$0 \( \) (No Variance) ### Summary of Variances - Direct Materials Price Variance: \$[/tex]5,925 (Unfavorable)
- Direct Materials Quantity Variance: -\[tex]$4,800 (Favorable) - Total Direct Materials Cost Variance: \$[/tex]1,125 (Unfavorable)
- Direct Labor Rate Variance: \[tex]$0 (No Variance) - Direct Labor Time Variance: \$[/tex]0 (No Variance)
- Total Direct Labor Cost Variance: \$0 (No Variance)

These variances help the company understand where they have deviated from their standard costs, and can be useful in identifying areas for improvement in cost control and efficiency.
We appreciate your contributions to this forum. Don't forget to check back for the latest answers. Keep asking, answering, and sharing useful information. For clear and precise answers, choose IDNLearn.com. Thanks for stopping by, and come back soon for more valuable insights.