Marvel Parts, Inc., manufactures auto accessories. One of the company\'s product

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 1,045 hours each month to produce 2,090 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 on 49,533 $23.70 10.4505.00 $ 4,598 2.20 $30.90 direct labor-hours) During August, the factory worked only 800 direct labor-hours and produced 1,900 sets of covers. The following actual costs were recorded during the month Per Set Total of Covers Direct materials (6,500 yards) Direct labor 44,460 $23.40 9,880 5.20 4,560 2.40 $31.00 Variable manufacturing overhead At standard, each set of covers should require 3.0 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.

Explanation / Answer

Standard Actual Particulars Qty/ hours Rate amount Qty/ hours Rate amount Materials              5,700.00                      7.90            45,030.00              6,500.00                  6.8400            44,460.00 Labour                  950.00               10.0000              9,500.00                  800.00               12.3500              9,880.00 Overhead                  950.00                      4.40              4,180.00                  800.00                  5.7000              4,560.00 Actual output              1,900.00 Materials reqd (1900*3)              5,700.00 Labour hrs reqd (1900* .50)                  950.00 Standard Material Rate = 23.70/3                      7.90 Standard Labour Rate = 5/.5                    10.00 Standard VO Rate = 2.20/.5                      4.40 DMPV = (SP-AP)*AQ purchased DMPV = (7.90 - 6.84)6500 DMPV = 6890 F DMQV= (SQ-AQ)SP DMQV= (5700 - 6500)7.90 DMQV= 6320 U DLRV= (SR-AR)AH DLRV= (10 - 12.35)800 DLRV= 1880 U DLEV = (SH-AH)SR DLEV = (950 - 800)10 DLEV = 1500 F VORV = (SR-AR)AH VORV = (4.40 - 5.70)800 VORV = 1040 U VOEV = (SH-AH)SR VOEV = (950 - 800)4.40 VOEV = 660 F

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