Marvel Parts, Inc., manufactures auto accessories. One of the company’s products

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 1,010 hours each month to produce 2,020 sets of covers. The standard costs associated with this level of production are: Total Per Set of Covers Direct materials $ 36,360 $ 18.00 Direct labor $ 7,070 3.50 Variable manufacturing overhead (based on direct labor-hours) $ 3,030 1.50 $ 23.00 During August, the factory worked only 1,080 direct labor-hours and produced 2,700 sets of covers. The following actual costs were recorded during the month: Total Per Set of Covers Direct materials (8,100 yards) $ 46,980 $ 17.40 Direct labor $ 9,990 3.70 Variable manufacturing overhead $ 4,590 1.70 $ 22.80 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.

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.)

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.)

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). Round your intermediate calculations to 2 decimal places. Round "Standard Rate" and "Actual Rate" answers to 2 decimal places.)

Explanation / Answer

Price per yard Quantity yards per cover Standard Actual Variance Analysis Standard Actual Variance Analysis Direct Materials 9 5.8 -3.2 Favorable 2 3 1 Unfavorable Labor rate per hour Labor efficiency Standard Actual Variance Analysis Standard Actual Variance Analysis Direct Labor 7 7.4 0.4 Unfavorable 7070 9450 2380 Unfavorable Variable overhead rate per labor hour Variable overhead efficiency Standard Actual Variance Analysis Standard Actual Variance Analysis Variable manufacturing overhead 3 3.4 0.4 Unfavorable 3030 4050 1020 Unfavorable

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