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 2,850 hours each month to produce 1,900 sets of covers. The standard costs associated with this level of production are:

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:

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.

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.)

rev: 12_26_2015_QC_CS-36151, 01_06_2016_QC_CS-36151

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:

Explanation / Answer

1 Material Price variance (Standard Price-Actual Price)*Actula Quantity used (4-3.8)*12000 = 2400 F Material Quantity variance (Standard Quantity for Actual Output-Actual Quantity)*Standard Price (2000*5.6-12000)*4 = 3200 U Calculation Per yardscost Standard (42560/(1900*5.6)) 4 Actual 45600/12000 3.8 2 Labour rate variance (Standard Price-Actual Price)*Actula Hours worked (6-6.5)*2800 = 1400 U Material Efficiency variance (Standard Hour for Actual Output-Actual Hour)*Standard Price (2850/1900*2000-2800)*6 = 1200 F Calculation Per Hour cost Standard 17100/2850 6.00 Actual 18200/2800 6.5 3 variable Overhead rate variance (Standard Price-Actual Price)*Actula Hours worked (2.4-2.5)*2800 = 280 U Varaiable overhead Efficiency variance (Standard Hour for Actual Output-Actual Hour)*Standard Price (2850/1900*2000-2800)*2.4 = 480 Calculation Per Hour cost Standard 6840/2850 2.4 Actual 7000/2800 2.5

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