Thanks in advance! Marvel Parts, Inc., manufactures auto accessories. One of the
ID: 2546836 • Letter: T
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Thanks in advance!
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 Per Set of Covers Total $.42, 560 Direct materials Direct labor Variable manufacturing overhead (based on $22.40 $ 51,300 27.00 3.60 $53.00 direct labor-hours) $ 6,840 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 Per Set Total of Covers Direct materials (12,000 yards) Direct labor 45,600 $22.80 49,000 24.50 3.50 $50.80 Variable manufacturing overhead $ 7,000 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. (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.)Explanation / Answer
Q1. MARVEL PARTS INC. Req 1: Std material required per unit of output: 5.6 yards Actual output: 2000 units Std material required (2000*5.6): 11,200 yards Std price per yard (22.40/5.6): 4 Actual pric per yard (45600/12000): 3.8 Actual Qty required: 12,000 yeards Material Price variance: Actual Qty (Std price- Actual price) 12000 (4.00 -3.80) = $2400 fav Material Quantity variance: Std price (Std qaunttity- Actual Quntity) 4 (11200-12000) = $3,200 Unfav Req 2: Sstd labouor hours required per unit: 1.5 hour Std labour hours allowed for actual output:2000*1.5: 3000 hours Actual hours: 2800 hours Actual rate(49000/2800): 17.5 Std rate per hour(27.00/1.5): 18 Labour rate Variance: Actual hours (Std rate-Actual rate) 2800 hours (18.00 -17.50) = $1,400 fav Labour efficiency variance: Std rate (Std hours -Actual Hours) 18 (3000 -2800) = $ 3,600 fav Req 3: Std variable OH rate per hour (3.60/1.5): 2.4 Actual OH rate (7000/2800) 2.5 Vraiable OH rate Variance: Actual Hours (Std OH rate-Actual OH rate) 2800 (2.4 -2.5): $280 unfavorable Varibale OH efficiency Vvariance: Std rate (Std hours -Actual Hours) 2.40 (3000- 2800): $ 4,800 Fav
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