Marvel Parts, Inc., manufactures auto accessories. One of the company’s products
ID: 2425473 • 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 1,065 hours each month to produce 2,130 sets of covers. The standard costs associated with this level of production are:
During August, the factory worked only 1,050 direct labor-hours and produced 2,700 sets of covers. The following actual costs were recorded during the month:
At standard, each set of covers should require 2.00 yards of material. All of the materials purchased during the month were used in production.
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 1,065 hours each month to produce 2,130 sets of covers. The standard costs associated with this level of production are:
Per Set Total of Covers Direct materials Direct labor Variable manufacturing overhead $35,358 $16.60 $ 8,520 4.00 $ 3,195 1.50 $22.10 (based on direct labor-hours)Explanation / Answer
Particulars Standard Actual Hrs Rate amount Hrss Rate amount Labour 1,350.00 8.0000 10,800.00 1,050.00 10.80 11,340.00 Overhead 1,350.00 3 4,050.00 1,050.00 5.40 5,670.00 Actual output 2,700.00 Labour hrs reqd(1065/2130*2700) 1,350.00 Labour hour rate = 8520/1065 8.00 Variable Overhead Rate = 3195/1065 3.00 VORV = (SR-AR)AH VORV = (3-5.40)1050 VORV = 2520 U VOEV = (SH-AH)SR VOEV = (1350-1050)3 VOEV = 900 F
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