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 1,015 hours each month to produce 2,030 sets of covers. The standard costs associated with this level of production are:

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

At standard, each set of covers should require 4.00 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 1,015 hours each month to produce 2,030 sets of covers. The standard costs associated with this level of production are:

Explanation / Answer

1) Materials price variance (Actual price - standard price)*AQ purchased ((5 - 7.3)*8400 19320 F Material Quantity variance (actual qty used - std qty allowed)*SR (8400   - 1500*4)*7.3 17520 U 2) Direcl labor rate variance (Actual rate - standard rate )*actul hours (6300     - 8)*700 700 U direct labor efficiency variance (Actual hrs - standard hrs allowed)*standard rate (700             - 1015/2030*1500)*8 (700 - 750)*8 400 F 3) Variable overhead rate variance (Actual rate - standard rate )*actul hours (3,150      - 3.8)*700 490 U Variable overhead Efficiency variance (Actual hrs - standard hrs allowed)*standard rate (700 -750)*3.8 190 F

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