Marvel Parts, Inc., manufactures auto accessories. One of the company\'s product
ID: 2436360 • 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 2,850 hours each month to produce 1,900 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 (based $42,560 $22.40 $51,300 27.00 3.60 $53.00 on direct labor-hours) $ 6,840 During August, the factory worked only 2,800 direct labor-hours and produced 2,000 sets of covers. The following actual costs were recorded during the month: Per Set Total of Covers Direct materials (12,000 yards) Direct labor Variable manufacturing overhead 45,600 $22.80 $49,000 24.50 $ 7,0003.50_ $50.80 At standard, each set of covers should require 5.6 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.) 1Materials price variance Materials quantity variance 2 Labor rate variance Labor efficiency variance 3 Variable overhead rate variance Variable overhead efficiency varianceExplanation / Answer
Answers
Actual DATA for
2000
units
Quantity (AQ)
Rate (AR)
Actual Cost
Direct Material
12000
$ 3.800
$ 45,600.00
Direct labor
2800
$ 17.50
$ 49,000.00
Variable Overhead
2800
$ 2.50
$ 7,000.00
Standard DATA for
2000
units
Quantity (SQ)
Rate (SR)
Standard Cost
Direct Material
11200
$ 4.00
$ 44,800.00
Direct labor
3000
$ 18.00
$ 54,000.00
Variable Overhead
3000
$ 2.40
$ 7,200.00
Material Price Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Quantity
(
$ 4.00
-
$ 3.80
)
x
12000
2400
Variance
$ 2,400.00
Favourable-F
Material Quantity Variance
(
Standard Quantity
-
Actual Quantity
)
x
Standard Rate
(
11200
-
12000
)
x
$ 4.00
-3200
Variance
$ 3,200.00
Unfavourable-U
Labor Rate Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Labor Hours
(
$ 18.00
-
$ 17.50
)
x
2800
1400
Variance
$ 1,400.00
Favourable-F
Labour Efficiency Variance
(
Standard Hours
-
Actual Hours
)
x
Standard Rate
(
3000
-
2800
)
x
$ 18.00
3600
Variance
$ 3,600.00
Favourable-F
Variable Overhead Rate Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Labor Hours
(
$ 2.40
-
$ 2.50
)
x
2800
-280
Variance
$ 280.00
Unfavourable-U
Variable Overhead Efficiency Variance
(
Standard Hours
-
Actual Hours
)
x
Standard Rate
(
3000
-
2800
)
x
$ 2.40
480
Variance
$ 480.00
Favourable-F
Actual DATA for
2000
units
Quantity (AQ)
Rate (AR)
Actual Cost
Direct Material
12000
$ 3.800
$ 45,600.00
Direct labor
2800
$ 17.50
$ 49,000.00
Variable Overhead
2800
$ 2.50
$ 7,000.00
Standard DATA for
2000
units
Quantity (SQ)
Rate (SR)
Standard Cost
Direct Material
11200
$ 4.00
$ 44,800.00
Direct labor
3000
$ 18.00
$ 54,000.00
Variable Overhead
3000
$ 2.40
$ 7,200.00
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