Marvel Parts, Inc., manufactures auto ac nearly any small car. The company has a

Question

Marvel Parts, Inc., manufactures auto ac nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that have beer set for the seat covers, the factory should work 1,070 hours each month to produce 2140 sets of covers. The standard costs associated with this level of production are: cessories. One of the company's products is a set of seat covers that can be adjusted to fit Per Set of c Direct materials Direct labor Variable manufacturing overhead (based $26,964 $12.60 $11,770 5.50 s 3,6381.70 $19.80 on direct labor-hours) 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: Per Set Total of Covers Direct materials (6,000 yards) Direct labor Variable manufacturing overhead s 29,280 $12.20 $13,680 5.70 s 5,7602.40 $20.30 At standard, each set of covers should require 1.5 yards of material. All of the materials purchased during the month were used in production. Required: Prev 1 of 2 Next> MacBook Air

Explanation / Answer

Req 1: Std Quantity required per unit of output: 1.50 yards Std quantity required (2400*1.50):3600 yards Actual Quantity: 6000 yards Actual price (29280/6000): $ 4.88 per yards Stdd price per yard (12.60/1.50): $ 8.40 Material price variance: Actual Quantity (Std price-Actual price) 6000 (8.40 -4.88 ) = 21,120 F Material Quantty Variance: Std price (Sd qty -Actual Qty ) 8.40 (3600 -6000) = $20,160 U Req 2: labouor hourr per unit: 0.50 per hour Std labour hours for actual output: 2400*0.50 = 1200 hours Std rate per hour: (11770/1070): $11 per hour Actual hours worked: 1000 hours Actual rate: (13680/1000): $ 13.68 per hour Labour rate varaiance: actual hours (Std rate -Actual rate) 1000 (11-13.68 )= $2680 U Labour efficiency variance: Std rate (Std hours-Actual hours) 11 (1200 -1000) =$2200 F Req 3: Std variable OH rate per hour (3638/1070)= $3.40 per hour Actual Variable oH rate per hour (5760/1000): $ 5.76 per hour Variable OH rate variance: Actual labour hours (Std rate-Actual rate) 1000 (3.40 -5.76)= $2360 U Variable OH efficiency variance: Std rate (Std hours-Actual Hours) 3.40 (1200-1000)= $680 F

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