Marvel Parts, Inc., manufactures auto accessories. One of the company’s products
ID: 2415235 • Letter: M
Question
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 1,030 hours each month to produce 2,060 sets of covers. The standard costs associated with this level of production are:
During August, the factory worked only 640 direct labor-hours and produced 1,600 sets of covers. The following actual costs were recorded during the month:
At standard, each set of covers should require 2.50 yards of material. All of the materials purchased during the month were used in production.
Compute the materials price and quantity 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). Round your intermediate calculations to 2 decimal places. Round "Standard Price" and "Actual Price" answers to 2 decimal places.)
Compute the labor 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). Round your intermediate calculations to 2 decimal places. Round "Standard Rate" and "Actual Rate" answers to 2 decimal places.)
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). Round your intermediate calculations to 2 decimal places. Round "Standard Rate" and "Actual Rate" answers to 2 decimal places.)
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 1,030 hours each month to produce 2,060 sets of covers. The standard costs associated with this level of production are:
Total Per Setof Covers Direct materials $ 39,140 $ 19.00 Direct labor $ 9,270 4.50 Variable manufacturing overhead
(based on direct labor-hours) $ 3,502 1.70 $ 25.20
During August, the factory worked only 640 direct labor-hours and produced 1,600 sets of covers. The following actual costs were recorded during the month:
Total Per Setof Covers Direct materials (5,500 yards) $ 29,920 $ 18.70 Direct labor $ 7,520 4.70 Variable manufacturing overhead $ 4,000 2.50 $ 25.90
At standard, each set of covers should require 2.50 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. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Round your intermediate calculations to 2 decimal places. Round "Standard Price" and "Actual Price" answers to 2 decimal places.)
x = Variance Materials price variance x = Variance Materials quantity variance 2.Compute the labor 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). Round your intermediate calculations to 2 decimal places. Round "Standard Rate" and "Actual Rate" answers to 2 decimal places.)
x = Variance Labor rate variance x = Variance Labor efficiency varianceCompute 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). Round your intermediate calculations to 2 decimal places. Round "Standard Rate" and "Actual Rate" answers to 2 decimal places.)
x = Variance Variable overhead rate variance x = Variance Variable overhead efficiency varianceExplanation / Answer
Solution:
(A). Material Price Varience:
Material Price Varience = 1,600 * 4.70 - 1,600 * 4.50
= 7,520- 7,200
= 320
(B). Material Quantity Varience:
Material Quantity Varience = 2,060 - 1,600 * 4.50
= 460 * 4.50
= 2,070
(C). Labour Rate Varience:
Labour Rate Varience = 1,600 * 4.70 - 1,600 * 4.50
= 7,520- 7,200
= 320
(D). Labor efficiency variance:
Labor efficiency variance = 640 * 1.70 - 1030 * 1.70
= 1088 - 1,751
= - 663
(E). Variable overhead rate variance:
Variable overhead rate variance = 640 ( 2.50 - 1.70)
= 1,598.3
(F) Variable overhead efficiency variance:
Variable overhead efficiency variance = 1.70 ( 1030 - 640)
= 1.70 * 390
= 663
Material Price Varience = Actual Quantity * Actual Price - Actual Quantity * Standered PriceRelated Questions
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