Marvel Parts, Inc., manufactures auto accessories. One of the company’s products
ID: 2479401 • 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 1,075 hours each month to produce 2,150 sets of covers. The standard costs associated with this level of production are:
During August, the factory worked only 800 direct labor-hours and produced 2,500 sets of covers. The following actual costs were recorded during the month:
At standard, each set of covers should require 3.00 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.)
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.)
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 1,075 hours each month to produce 2,150 sets of covers. The standard costs associated with this level of production are:
Total Per Setof Covers Direct materials $ 51,170 $ 25.50 Direct labor $ 10,750 5.00 Variable manufacturing overhead
(based on direct labor-hours) $ 5,375 2.50 $ 33.00
During August, the factory worked only 800 direct labor-hours and produced 2,500 sets of covers. The following actual costs were recorded during the month:
Total Per Setof Covers Direct materials (12,500 yards) $ 58,750 $ 23.50 Direct labor $ 13,000 5.20 Variable manufacturing overhead $ 7,000 2.80 $ 31.50
At standard, each set of covers should require 3.00 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.)
Actual Price x Actual Quantity Standard Price = Variance Materials price variance 12,500.00 0 Standard Price x Actual Quantity Standard Quantity = Variance Materials quantity variance 0Explanation / Answer
Standard Hours 1075 Hours Standard Production 2150 Sets Each set of seat cover required 3 Yards Total Per set of Covers Direct Material $ 51,170.00 $ 25.50 Direct Labor $ 10,750.00 $ 5.00 Variable Manufacturing Overhead $ 5,375.00 $ 2.50 (Based on Direct Labor Hours) $ 33.00 Actual Hours 800 Hours Actual Production 2500 Sets Total Per Set of Covers Direct Material(12500 Yards) $ 58,750.00 $ 23.50 Direct Labor $ 13,000.00 $ 5.20 Variable Manufacturing Overhead $ 7,000.00 $ 2.80 (Based on Direct Labor Hours) $ 31.50 The standard rate per hour of direct labor is $ 10.00 The Standard direct labor hours allowed per unit of output 2 Hours The Standard Price per yards for material is $ 8.50 Direct Material Quantity Variance=SP(AQ-SQ) SQ= 7500 AQ= 12500 SP= $ 8.50 Direct Material Quantity Variance= $ 42,500.00 (U) Material Price Variance=AQ(AP-SP) AQ= 12500 SP= $ 8.50 Material Price Variance= ($47,500.00) (F) Direct Labor Efficiency Variance=SR(AH-SH) Direct Labor Efficiency Variance= $ 2,750.00 (F) Direct Labor Rate Variance=AH(AR-SR) AH*AR= $ 13,000.00 AH*SR= $ 8,000.00 Direct Labor Rate Variance=AH(AR-SR) $ 5,000.00 (U) Varable Overhead Efficiency Variance=SR(AH-SH) $ (1,375.00) (F) Variable Overhead Rate Variance=AH(AR-SR) AH*AR= 7000 AH*SR= 4000 Variable Overhead Rate Variance=AH(AR-SR) 3000 (U)
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