Marvel Parts, Inc., manufactures auto accessories. One of the company\'s product

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 630 hours each month to produce 2,100 sets of covers. The standard costs associated with this level of production are: Per Set Direct materials Direct labor Variable manufacturing overhead (based Total of Covers S 38, 648 $18.4 S 6,30e 3.ee on direct labor-hours) s 3,15e 1.5 $22.98 During August, the factory worked only 500 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 (5,880 yards) Direct labor Variable manufacturing overhead $36,880 $18.9e S 6,400 3.20 S 4,400 2.20 S23.40 At standard, each set of covers should require 2.3 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 varianc 3. Compute the variable overhead rate and efficiency variances for August. 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

Standard direct materials price per pound = 18.40/2.3 8 1) Material price variance (Actual price - standard price)*AQ purchased (36000 - 5000*8) 4000 F 2) Material efficeincy variance (actual usage - std qty allowed)*standard rate (5,000 - 2000*2.3)*8 3200 U 3) labor rate variaance (Actual rate - standard rate)*actual hours (12.8 - 10)*500 1400 U 4) labor Efficiency variance (Actual hours - standard hrs)*std rate (500 - 600)*10 1000 F 5) Variable overhead rat evariance (Actual rate - standard rate)*actual hours (8.8 - 5)*500 1900 U 6) Variable overhead Efficiency variabce (Actual hours - standard hrs)*std rate (500 -600)*5 500 F

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