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 2,850 hours each month to produce 1,900 sets of seat covers. The standard costs associated with this level of production are: Direct materials Direct labor Variable manufacturing overhead (based on direct labor-hours) Total $ 42,560 $ 51,300 $ 6,840 Direct materials (12,000 yards) Direct labor Variable manufacturing overhead Per Set of Covers Total $ 45,600 $ 49,000 $ 7,000 $ 22.40 27.00 During August, the factory worked 2,800 direct labor-hours and produced 2,000 sets of covers. The following actual costs were recorded during the month: 3.60 $ 53.00 Per Set of Covers $22.80 24.50 3.50 $ 50.80

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 2,850 hours each month to produce 1,900 sets of seat covers. The standard costs associated with this level of production are: Direct materials Direct labor Variable manufacturing overhead (based on direct labor-hours) Total $ 42,560 $ 51,300 $ 6,840 Direct materials (12,000 yards) Direct labor Variable manufacturing overhead Per Set of Covers Total $ 45,600 $ 49,000 $ 7,000 $ 22.40 27.00 During August, the factory worked 2,800 direct labor-hours and produced 2,000 sets of covers. The following actual costs were recorded during the month: 3.60 $ 53.00 Per Set of Covers $22.80 24.50 3.50 $ 50.80

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Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...

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Concept explainers

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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Question

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 2,850 hours each month to produce 1,900 sets of seat covers. The standard costs
associated with this level of production are:
Direct materials
Direct labor
Variable manufacturing overhead (based on
direct labor-hours)
Total
$ 42,560
$ 51,300
$ 6,840
Direct materials (12,000 yards)
Direct labor
Variable manufacturing overhead
Per Set of
Covers
$22.40
27.00
During August, the factory worked 2,800 direct labor-hours and produced 2,000 sets of covers. The following actual costs were
recorded during the month:
Total
$ 45,600
$ 49,000
$ 7,000
3.60
$ 53.00
Per Set of
Covers
$ 22.80
24.50
3.50
$50.80
At standard, each set of covers should require 5.6 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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