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: Direct materials (5,000 yards) Direct labor Variable manufacturing overhead Total $ 36,000 $ 6,400 $ 4,400 Per Set of Covers $ 18.00 3.20 2.20 $ 23.40 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. 1. Materials price variance 1. Materials quantity variance 2. Labor rate variance 2. Labor efficiency variance 3. Variable overhead rate variance 3. Variable overhead efficiency variance 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.)
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: Direct materials (5,000 yards) Direct labor Variable manufacturing overhead Total $ 36,000 $ 6,400 $ 4,400 Per Set of Covers $ 18.00 3.20 2.20 $ 23.40 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. 1. Materials price variance 1. Materials quantity variance 2. Labor rate variance 2. Labor efficiency variance 3. Variable overhead rate variance 3. Variable overhead efficiency variance 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.)
Chapter1: Financial Statements And Business Decisions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text: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:
Direct materials (5,000 yards)
Direct labor
Variable manufacturing overhead
Total
$ 36,000
$ 6,400
$ 4,400
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.
Per Set of
Covers
$18.00
3.20
2.20
$ 23.40
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.
1. Materials price variance
1. Materials quantity variance
2. Labor rate variance
(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.)
2. Labor efficiency variance
3. Variable overhead rate variance
3. Variable overhead efficiency variance
![Problem 9-24 (Algo) Comprehensive Variance Analysis [LO9-4, LO9-5, LO9-6]
Marvel Parts, Incorporated, 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 uses a standard cost system 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:
Direct materials
Direct labor
Variable manufacturing overhead (based
on direct labor-hours)
Total
$ 38,640
$ 6,300
$ 3,150
Direct materials (5,000 yards)
Direct labor
Variable manufacturing overhead
Per Set of
Covers
Total
$ 36,000
$ 6,400
$ 4,400
$ 18.40
3.00
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:
1.50
$ 22.90
Per Set of
Covers
$ 18.00
3.20
2.20
$ 23.40
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 variances for August.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fecb3ccf8-64a3-4f42-90b5-c9c7edf16923%2Fe18068a6-2e4a-432b-9044-0b3be97728fe%2Fjb19kp_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 9-24 (Algo) Comprehensive Variance Analysis [LO9-4, LO9-5, LO9-6]
Marvel Parts, Incorporated, 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 uses a standard cost system 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:
Direct materials
Direct labor
Variable manufacturing overhead (based
on direct labor-hours)
Total
$ 38,640
$ 6,300
$ 3,150
Direct materials (5,000 yards)
Direct labor
Variable manufacturing overhead
Per Set of
Covers
Total
$ 36,000
$ 6,400
$ 4,400
$ 18.40
3.00
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:
1.50
$ 22.90
Per Set of
Covers
$ 18.00
3.20
2.20
$ 23.40
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 variances for August.
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