Marvel Parts, Inc., manufactures auto accessories. One of the company’s products
ID: 2531485 • 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 980 hours each month to produce 1,960 sets of covers. The standard costs associated with this level of production are:
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:
At standard, each set of covers should require 2.5 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.
(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
Total Per Setof Covers Direct materials $ 32,340 $ 16.50 Direct labor $ 6,860 3.50 Variable manufacturing overhead (based on direct labor-hours) $ 1,960 1.00 $ 21.00
Explanation / Answer
Answers
Actual DATA for
2100
Set of covers
Quantity (AQ)
Rate (AR)
Actual Cost
Direct Material
6000
$ 5.670
$ 34,020.00
Direct labor
1000
$ 7.77
$ 7,770.00
Variable Overhead
1000
$ 3.99
$ 3,990.00
Standard DATA for
2100
Set of covers
Quantity (SQ)
Rate (SR)
Standard Cost
Direct Material
5250
$ 6.60
$ 34,650.00
Direct labor
1050
$ 7.00
$ 7,350.00
Variable Overhead
1050
$ 2.00
$ 2,100.00
Material Price Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Quantity
(
$ 6.60
-
$ 5.67
)
x
6000
5580
Variance
5580
Favourable-F
Material Quantity Variance
(
Standard Quantity
-
Actual Quantity
)
x
Standard Rate
(
5250
-
6000
)
x
$ 6.60
-4950
Variance
4950
Unfavourable-U
Material Spending Variance
(
Standard Cost
-
Actual Cost
)
(
$ 34,650.00
-
$ 34,020.00
)
630
Variance
630
Favourable-F
Labor Rate Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Labor Hours
(
$ 7.00
-
$ 7.77
)
x
1000
-770
Variance
770
Unfavourable-U
Labour Efficiency Variance
(
Standard Hours
-
Actual Hours
)
x
Standard Rate
(
1050
-
1000
)
x
$ 7.00
350
Variance
350
Favourable-F
Labor Spending Variance
(
Standard Cost
-
Actual Cost
)
(
$ 7,350.00
-
$ 7,770.00
)
-420
Variance
420
Unfavourable-U
Variable Overhead Rate Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Labor Hours
(
$ 2.00
-
$ 3.99
)
x
1000
-1990
Variance
1990
Unfavourable-U
Variable Overhead Efficiency Variance
(
Standard Hours
-
Actual Hours
)
x
Standard Rate
(
1050
-
1000
)
x
$ 2.00
100
Variance
100
Favourable-F
Variable Overhead Spending Variance
(
Standard Cost
-
Actual Cost
)
(
$ 2,100.00
-
$ 3,990.00
)
-1890
Variance
1890
Unfavourable-U
Actual DATA for
2100
Set of covers
Quantity (AQ)
Rate (AR)
Actual Cost
Direct Material
6000
$ 5.670
$ 34,020.00
Direct labor
1000
$ 7.77
$ 7,770.00
Variable Overhead
1000
$ 3.99
$ 3,990.00
Standard DATA for
2100
Set of covers
Quantity (SQ)
Rate (SR)
Standard Cost
Direct Material
5250
$ 6.60
$ 34,650.00
Direct labor
1050
$ 7.00
$ 7,350.00
Variable Overhead
1050
$ 2.00
$ 2,100.00
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.