Marvel Parts, Inc., manufactures auto accessories. One of the company’s products
ID: 2463136 • 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 1,230 hours each month to produce 2,050 sets of covers. The standard costs associated with this level of production are:
During August, the factory worked only 750 direct labor-hours and produced 1,500 sets of covers. The following actual costs were recorded during the month:
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.)
1.Material price variance--
2.Material quantity variance--
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.)
Labor rate variance--
Labor efficiency variance--
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 1,230 hours each month to produce 2,050 sets of covers. The standard costs associated with this level of production are:
Explanation / Answer
NOTE:- No. of yard for standard material is not given, because of which material price and usage variance cant be calculated, i need Standard Price and Standard Material yards to calculate variances but material yard is missing.
The Standard rate (SR) per hour for direct labor is => 8610 / 1230 => 7 per hour
The standard direct labor hours allowed per unit of output is => 4.20 / 7 => 0.6 per unit
The Standard rate (SR) per hour for Variable manufacturing overhead is => 4800/1230 => 4 per hour
The standard Variable manufacturing overhead allowed per unit of output is => 2.40 / 4 => 0.6 per unit
The Actual rate (AR) per hour for direct labor is => 6600/750 => 8.8
The Actual rate (AR) per hour for Variable manufacturing overhead is =>4800 /750 => 6.4
Labor rate variance => (AH x AR) - (AH x SR)
=> (750 * 8.8) -( 750 * 7)
Labor rate variance => 1350 U
Labor efficiency variance => SR (AH - SH*)
=> 7 ( 750 - 900)
Labor efficiency variance => 1050 F
*SH = Standard hours per unit x Actual output
=> 0.6 * 1500 => 900
Variable overhead rate variance => (AH x AR) - (AH x SR)
=> (750 *6.4) - (750* 4 )
Variable overhead rate variance => 1800 U
Variable overhead efficiency variance => SR (AH - SH*)
=> 4 * ( 750 - 900)
Variable overhead efficiency variance => 600F
*SH = Standard hours per unit x Actual output
=> 0.6 * 1500 => 900
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