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.

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.

Total Per Set
of Covers Direct materials $ 42,560 $ 22.40 Direct labor $ 51,300 27.00 Variable manufacturing overhead (based on direct labor-hours) $ 6,840 3.60 $ 53.00

Explanation / Answer

hours 2850 Covers 1900 Cover Per Hour 1.5 (2850/1900) Total Per Cover Direct Material 42560 22.4 Direct Labour 51300 27 Variable OH 6840 3.6 (6840/2850)*1.5 Actual 2800 Hours and 2000 Covers Direct Material 45600 22.8 Direct Labour 49000 24.5 Variable OH 7000 4.9 (7000/2800)1.4 Material Price Variance 0.4 800 (22.8-22.4) Quantity Variance 100 (2000-1900) Labour Rate -2.5 -7000 (24.5-27) Efficiency (Budget - Actual) Actual Labour Rate 17.5 (49000/2800) Budgeted 24.5 Efficiency -14000

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.