4 Marvel Parts, Inc., manufactures auto accessories. One of the company\'s produ

Question

4 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 1,070 hours each month to produce 2,140 sets of covers. The standard costs associated with this level of production are 176 Total of Covers $ 26,964 $12.60 Direct labor Variable manufacturing overhead (based on $11,770 5.50 $ 3.638 1.70 $19.80 direct labor-hours) During August, the factory worked only 1,000 direct labor-hours and produced 2.400 sets of covers. The following actual costs were recorded during the month Per Set Total of Covers $ 29,280 $12.28 s 13,680 5.70 $ 5,760 2.48 Direct labor At standard, each set of covers should require 1.5 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 icate 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

Direct material Qty Variance Standard price(Standard Quantity -Actual quantity) 12.60(3600-6000) 30240 A Standard Quantity 2400*1.5 3600 Direct material Price Variance Actual Quantity (standard Cost- Actual Cost) 6000(12.60-12.20) 2400 F Direct Labour Price Variance (Standard rate-Actual rate)* Actual Hours (5.50-5.70)*1000 200 A Direct Labour Efficiency Variance Standard Rate (Standard Hours-Actual Hours) 5.50(1200-1000) 1100 F Standard Variable overhead rate 5760/1200 4.8 Variable Overhead variance Standard Overhead Rate (Standard Hours-Actual Hours) 4.8(1200-1000) 960 F

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