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 1,060 hours each month to produce 2,120 sets of seat covers. The standard costs associated with this level of production are: Total Per Set of Covers Direct materials $ 43,460 $ 20.50 Direct labor $ 9,540 4.50 Variable manufacturing overhead (based on direct labor-hours) $ 4,664 2.20 $ 27.20 During August, the factory worked 500 direct labor-hours and produced 2,200 sets of covers. The following actual costs were recorded during the month: Direct materials (8,000 yards) Direct labor Total $ 44,000 Per Set of Covers $ 20.00 $ 10,340 Variable manufacturing overhead $ 5,500 4.70 2.50 $ 27.20 At standard, each set of covers should require 2.5 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: 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 1. Materials quantity variance 2. Labor rate variance 2. Labor efficiency variance 3. Variable overhead rate variance 3. Variable overhead efficiency variance
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 1,060 hours each month to produce 2,120 sets of seat covers. The standard costs associated with this level of production are: Total Per Set of Covers Direct materials $ 43,460 $ 20.50 Direct labor $ 9,540 4.50 Variable manufacturing overhead (based on direct labor-hours) $ 4,664 2.20 $ 27.20 During August, the factory worked 500 direct labor-hours and produced 2,200 sets of covers. The following actual costs were recorded during the month: Direct materials (8,000 yards) Direct labor Total $ 44,000 Per Set of Covers $ 20.00 $ 10,340 Variable manufacturing overhead $ 5,500 4.70 2.50 $ 27.20 At standard, each set of covers should require 2.5 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: 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 1. Materials quantity variance 2. Labor rate variance 2. Labor efficiency variance 3. Variable overhead rate variance 3. Variable overhead efficiency variance
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 6PB: Box Springs. Inc., makes two sizes of box springs: queen and king. The direct material for the queen...
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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 1,060 hours each month to produce 2,120 sets of seat covers. The
standard costs associated with this level of production are:
Total
Per Set of
Covers
Direct materials
$ 43,460
$ 20.50
Direct labor
$ 9,540
4.50
Variable manufacturing overhead (based
on direct labor-hours)
$ 4,664
2.20
$ 27.20
During August, the factory worked 500 direct labor-hours and produced 2,200 sets
of covers. The following actual costs were recorded during the month:
Direct materials (8,000 yards)
Direct labor
Total
$ 44,000
Per Set of
Covers
$ 20.00
$ 10,340
Variable manufacturing overhead
$ 5,500
4.70
2.50
$ 27.20
At standard, each set of covers should require 2.5 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: 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
1. Materials quantity variance
2. Labor rate variance
2. Labor efficiency variance
3. Variable overhead rate variance
3. Variable overhead efficiency variance
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