Marvel Parts, Inc., manufactures auto accessories. One of the company’s products
ID: 2515768 • 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 1,070 hours each month to produce 2,140 sets of covers. The standard costs associated with this level of production are:
Total Per Set of Covers Direct materials $ 26,964 $ 12.60 Direct labor $ 11,770 5.50 Variable manufacturing overhead (based on direct labor-hours) $ 3,638 1.70 $ 19.80 During August, the factory worked only 1,000 direct labor-hours and produced 2,400 sets of covers. The following actual costs were recorded during the month:
Total Per Set of Covers Direct materials (6,000 yards) $ 29,280 $ 12.20 Direct labor $ 13,680 5.70 Variable manufacturing overhead $ 5,760 2.40 $ 20.30
Materials price variance Materlals quantity varlance 2. Compute the labor rate and efficiency variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (.e, zero varlance).) s 2,680 $ 2.200 Labor rate variance Labor efficiency variance 3. Compute the variable overhead rate and efficiency variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).) Variable overhead rate variance $ 2.360 Variable overhead efficiency varianceExplanation / Answer
1) Materials price variance (Actual price - standard price)*AQ purchased (4.88 -8.4)*6000 21120 F Material Quantity variance (actual qty used - std qty allowed)*SR (6000 - 1.5*2400)8.4 20,160 U 2) Direcl labor rate variance (Actual rate - standard rate )*actul hours (13.68 - 11)*1000 2680 U direct labor efficiency variance (Actual hrs - standard hrs allowed)*standard rate (1000 - 2400*.5)*11 2,200 F 3) Variable overhead rate variance (Actual rate - standard rate )*actul hours (5.76-3.4)*1000 2360 U Variable overhead Efficiency variance (Actual hrs - standard hrs allowed)*standard rate 0 (1000-1200)*3.4 680 F
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