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 1,035 hours each month to produce 2,070 sets of covers. The standard costs associated with this level of production are:

During August, the factory worked only 500 direct labor-hours and produced 1,700 sets of covers. The following actual costs were recorded during the month:

At standard, each set of covers should require 2.00 yards of material. All of the materials purchased during the month were used in production.

Compute the materials price and quantity variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)

Compute the labor rate and efficiency variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)

Compute the variable overhead rate and efficiency variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)

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 1,035 hours each month to produce 2,070 sets of covers. The standard costs associated with this level of production are:

Explanation / Answer

Standard Actual Particulars Qty/ hours Rate amount Qty/ hours Rate amount Materials              3,400.00                      7.70            26,180.00              5,000.00                      5.10            25,500.00 Labour                  850.00                  6.0000              5,100.00                  500.00               10.8800              5,440.00 Overhead                  850.00                      4.20              3,570.00                  500.00                      8.16              4,080.00 Actual output              1,700.00 Materials reqd (1700 * 2)              3,400.00 Labour hrs reqd (1035/2070 * 1700)                  850.00 Direct material per yard = 15.40/2                      7.70 Direct labour per hour = 3/.50                      6.00 Variable overhead per hour = 2.10/.5                      4.20 DMPV = (SP-AP)*AQ purchased DMPV = (7.70 - 5.10)5000 DMPV = 13000 F DMQV= (SQ-AQ)SP DMQV= (3400 - 5000)7.70 DMQV= 12,320U DLRV= (SR-AR)AH DLRV= (6 - 10.88)500 DLRV= 2440 U DLEV = (SH-AH)SR DLEV = (850 - 500)6 DLEV = 2,100 F VORV = (SR-AR)AH VORV = (4.20 - 8.16)500 VORV = 1,980 U VOEV = (SH-AH)SR VOEV = (850 - 500)4.20 VOEV = 1,470F

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