Marvel Parts, Inc., manufactures auto accessories. One of the company’s products
ID: 2586499 • 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 1,030 hours each month to produce 2,060 sets of covers. The standard costs associated with this level of production are:
During August, the factory worked only 640 direct labor-hours and produced 1,600 sets of covers. The following actual costs were recorded during the month:
At standard, each set of covers should require 2.50 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. (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).)
2. 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).)
3. 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).)
Total Per Set
of Covers Direct materials $ 39,140 $ 19.00 Direct labor $ 9,270 4.50 Variable manufacturing overhead
(based on direct labor-hours) $ 3,502 1.70 $ 25.20
Explanation / Answer
Standard August Material Price Variance F/U Material quantity variance F/U Labor rate variance F/U Labor efficiency variance F/U Variable o/h rate variance F/U Variable overhead efficiency variance F/U Output - sets of covers 2060 1600 Labor hours 1030 640 Material quantity - standard 5150 4000 Material quantity - actual 5500 1500 U labor hours per set 0.5 0.4 0.1 F Variable overhead per labor hour 3.4 6.25 2.85 U $ $ total Per set of covers total Per set of covers Direct Materials 39140 19 29920 18.7 0.3 F Direct Labor 9270 4.5 7520 4.7 0.2 U Variable man overhead 3502 1.7 4000 2.5 0.8 U 51912 25.2 41440 25.9
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