Marvel Parts, Incorporated, manufactures auto accessories including a set of seat covers that can be adjusted to fit most cars. According to its standards, the factory should work 995 hours each month to produce 1,990 sets of seat covers. The standard costs associated with this level of production are: Total Per Set of Covers Direct materials $ 47,362 Direct labor $ 8,955 Variable manufacturing overhead (based on direct labor-hours) $ 2,388 $ 23.80 4.50 1.20 $ 29.50 During August, the factory worked 1,000 direct labor-hours and produced 2,300 sets of covers. The following actual costs were recorded during the month: Total Direct materials (8,800 yards) Direct labor $ 50,600 Per Set of Covers $ 22.00 $ 10,580 4.60 Variable manufacturing overhead $ 4,600 2.00 $ 28.60 At standard, each set of covers should require 3.5 yards of material. All of the materials purchased during the month were used in production.
Marvel Parts, Incorporated, manufactures auto accessories including a set of seat covers that can be adjusted to fit most cars. According to its standards, the factory should work 995 hours each month to produce 1,990 sets of seat covers. The standard costs associated with this level of production are: Total Per Set of Covers Direct materials $ 47,362 Direct labor $ 8,955 Variable manufacturing overhead (based on direct labor-hours) $ 2,388 $ 23.80 4.50 1.20 $ 29.50 During August, the factory worked 1,000 direct labor-hours and produced 2,300 sets of covers. The following actual costs were recorded during the month: Total Direct materials (8,800 yards) Direct labor $ 50,600 Per Set of Covers $ 22.00 $ 10,580 4.60 Variable manufacturing overhead $ 4,600 2.00 $ 28.60 At standard, each set of covers should require 3.5 yards of material. All of the materials purchased during the month were used in production.
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:Marvel Parts, Incorporated, manufactures auto accessories including a set of seat covers that can be adjusted to fit most cars.
According to its standards, the factory should work 995 hours each month to produce 1,990 sets of seat covers. The standard costs
associated with this level of production are:
Total
Direct materials
$ 47,362
Direct labor
$ 8,955
Per Set of
Covers
$ 23.80
4.50
Variable manufacturing overhead (based
on direct labor-hours)
$ 2,388
1.20
$ 29.50
During August, the factory worked 1,000 direct labor-hours and produced 2,300 sets of covers. The following actual costs were
recorded during the month:
Total
Direct materials (8,800 yards)
Direct labor
$ 50,600
Per Set of
Covers
$ 22.00
$ 10,580
4.60
Variable manufacturing overhead
$ 4,600
2.00
$ 28.60
At standard, each set of covers should require 3.5 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.
Note: Do not round intermediate calculations. 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.
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