Marvel Parts Marvel Parts, Inc., manufactures auto accessories. One of the compa
ID: 2333254 • Letter: M
Question
Marvel Parts
Marvel Parts, Inc., manufactures auto accessories. One of the company's products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that have been set for the seat covers, the factory should work 1,015 hours each month to produce 2,030 sets of covers. The standard costs associated with this level of production are Per Set Direct materials Direct labor Variable manufacturing overhead (based Total of Covers $ 8,120 $ 3,857 $59,276 $29.20 4.00 1.90 $35.10 on direct labor-hours) During August, the factory worked only 700 direct labor-hours and produced 1,500 sets of covers. The following actual costs were recorded during the month Per Set Total of Covers $ 42,000 $28.00 4.20 2.10 $34.30 Direct materials (8,400 yards) Direct labor $ 6,300 $ 3,150 Variable manufacturing overhead At standard, each set of covers should require 4.0 yards of material. All of the materials purchased during the month were used in production Required: 1. Compute the materials price and quantity variances for August. 2. Compute the labor rate and efficiency variances for August. 3. Compute the variable overhead rate and efficiency variances for August. (indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)Explanation / Answer
Answers
--Actual data
Actual DATA for
1500
units
Quantity (AQ)
Rate (AR)
Actual Cost
Direct Material
8400
$ 5.000
$ 42,000.00
Direct labor
700
$ 9.00
$ 6,300.00
Variable Overhead
700
$ 4.50
$ 3,150.00
---Standard data
Standard DATA for
1500
units
Quantity (SQ)
Rate (SR)
Standard Cost
[A]
[B]
[A x B]
Direct Material
( 4yards x 1500 units)=6000yards
$ 7.30
$ 43,800.00
Direct labor
( 0.5hr x 1500 units)=750hr
$ 8.00
$ 6,000.00
Variable Overhead
( 0.5hr x 1500 units)=750hr
$ 3.80
$ 2,850.00
1
Material Price Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Quantity
(
$ 7.30
-
$ 5.00
)
x
8400
19320
Variance
$ 19,320.00
Favourable-F
Material Quantity Variance
(
Standard Quantity
-
Actual Quantity
)
x
Standard Rate
(
6000
-
8400
)
x
$ 7.30
-17520
Variance
$ 17,520.00
Unfavourable-U
2
Labor Rate Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Labor Hours
(
$ 8.00
-
$ 9.00
)
x
700
-700
Variance
$ 700.00
Unfavourable-U
Labour Efficiency Variance
(
Standard Hours
-
Actual Hours
)
x
Standard Rate
(
750
-
700
)
x
$ 8.00
400
Variance
$ 400.00
Favourable-F
3
Variable Overhead Rate Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Labor Hours
(
$ 3.80
-
$ 4.50
)
x
700
-490
Variance
$ 490.00
Unfavourable-U
Variable Overhead Efficiency Variance
(
Standard Hours
-
Actual Hours
)
x
Standard Rate
(
750
-
700
)
x
$ 3.80
190
Variance
$ 190.00
Favourable-F
Actual DATA for
1500
units
Quantity (AQ)
Rate (AR)
Actual Cost
Direct Material
8400
$ 5.000
$ 42,000.00
Direct labor
700
$ 9.00
$ 6,300.00
Variable Overhead
700
$ 4.50
$ 3,150.00
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