Problem 10-9 Comprehensive Vari ance Analysis [L010-1, LO1O-2, LO10-3] Marvel Pa

Question

Problem 10-9 Comprehensive Vari ance Analysis [L010-1, LO1O-2, LO10-3] 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 980 hours each month to produce 1,960 sets of covers. The standard costs associated with this level of production are: Tota Direct materials Direct labor Variable manufacturing overhead (based on 32,340 $16.58 $ 6,860 3.5e 1.960 1.00 21.00 direct labor-hours) During August, the factory worked only 1,000 direct labor-hours and produced 2,100 sets of covers. The following actual costs were recorded during the month: Total of Direct materials (6,000 yards) Direct labor 34,020 $16.20 $7,770 3.70 3,991.90 21.80 Variable manufacturing overhead At standard, each set of covers should require 2.5 yards of material. All of the materials purchased during the month were used in productiorn 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. (Indicate the effect of each veriance by selecting "F for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Explanation / Answer

No. of Seat Covers Produced = 2,100 Standard Actual SQ / SH SR Total AQ / AH AR Total Direct Material         5,250           6.60      34,650         6,000           5.67      34,020 Direct labor         1,050           7.00         7,350         1,000           7.77         7,770 Variable MOH         1,050           2.00         2,100         1,000           3.99         3,990 Answer 1. Direct Material Price Variance = (SR - AR) X AQ Purchased Direct Material Price Variance = ($6.60 - $5.67) X6,000 yards Direct Material Price Variance = $5,580 (F) Direct Material Quantity Variance = (SQ - AQ) X SR Direct Material Quantity Variance = (5,250 yards - 6,000 yards) X $6.60 Direct Material Quantity Variance = $4,950 (U) Answer 2. Direct Labor Rate Variance = (SR - AR) X AH Direct Labor Rate Variance = ($7 - $7.77) X 1,000 Hrs Direct Labor Rate Variance = $770 (U) Direct Labor Efficiency Variance = (SH - AH) X SR Direct Labor Efficiency Variance = (1,050 hrs - 1,000 hrs) X $7 Direct Labor Efficiency Variance = $350 (F) Answer 3. Variable Overhead Rate Variance = (SR - AR) X AH Variable Overhead Rate Variance = ($2 - $3.99) X 1,000 hrs Variable Overhead Rate Variance = $1,990 (U) Variable Overhead Efficiency Variance = (SH - AH) X SR Variable Overhead Efficiency Variance = (1,050 hrs - 1,000 hrs) X $2 Variable Overhead Efficiency Variance = $100 (F) As per Chegg Guidelines, you can ask one question at a time.

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

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