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 1,070 hours each month to produce 2,140 sets of covers. The standard costs associated with this level of production are: Total Per Set of Covers Direct materials $ 26,964 $ 12.60 Direct labor $ 11,770 5.50 Variable manufacturing overhead (based on direct labor-hours) $ 3,638 1.70 $ 19.80 During August, the factory worked only 1,000 direct labor-hours and produced 2,400 sets of covers. The following actual costs were recorded during the month: Total Per Set of Covers Direct materials (6,000 yards) $ 29,280 $ 12.20 Direct labor $ 13,680 5.70 Variable manufacturing overhead $ 5,760 2.40 $ 20.30 At standard, each set of covers should require 1.5 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. 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.) 1. Materials price variance not attempted not attempted Materials quantity variance not attempted not attempted 2. Labor rate variance not attempted not attempted Labor efficiency variance not attempted not attempted 3. Variable overhead rate variance not attempted not attempted Variable overhead efficiency variance not attempted not attempted

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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 1,070 hours each month to produce 2,140 sets of covers. The standard costs associated with this level of production are:

	Total	Per Set of Covers
Direct materials	$	26,964	$	12.60
Direct labor	$	11,770		5.50
Variable manufacturing overhead (based on direct labor-hours)	$	3,638		1.70
			$	19.80

During August, the factory worked only 1,000 direct labor-hours and produced 2,400 sets of covers. The following actual costs were recorded during the month:

	Total	Per Set of Covers
Direct materials (6,000 yards)	$	29,280	$	12.20
Direct labor	$	13,680		5.70
Variable manufacturing overhead	$	5,760		2.40
			$	20.30

At standard, each set of covers should require 1.5 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.

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.)


1.	Materials price variance	not attempted	not attempted
	Materials quantity variance	not attempted	not attempted
2.	Labor rate variance	not attempted	not attempted
	Labor efficiency variance	not attempted	not attempted
3.	Variable overhead rate variance	not attempted	not attempted
	Variable overhead efficiency variance	not attempted	not attempted

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