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 1015 hours each month to produce 2,030 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) Direct materials (6,400 yards) Direct labor Variable manufacturing overhead Total $ 59,276 $ 8,120 $ 3,857 During August, the factory worked 700 direct labor-hours and produced 1,500 sets of covers. The following actual costs were recorde during the month 1 Materials price variance 1 Matenals quantity variance 2 Labor rate variance 2 Labor efficiency variance 3 Vanable overhead rate variance 3 Variable overhead efficiency variance Per Set of Covers $29.20 4.00 Total $ 42,000 $.6,300 $3,150 1.90 $35.10 Per Set of Covers $28.00 4.20 2.10 $ 34.30 At standard, each set of covers should require 4.0 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... zero variance). Input all amounts as positive values. 4
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 1015 hours each month to produce 2,030 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) Direct materials (6,400 yards) Direct labor Variable manufacturing overhead Total $ 59,276 $ 8,120 $ 3,857 During August, the factory worked 700 direct labor-hours and produced 1,500 sets of covers. The following actual costs were recorde during the month 1 Materials price variance 1 Matenals quantity variance 2 Labor rate variance 2 Labor efficiency variance 3 Vanable overhead rate variance 3 Variable overhead efficiency variance Per Set of Covers $29.20 4.00 Total $ 42,000 $.6,300 $3,150 1.90 $35.10 Per Set of Covers $28.00 4.20 2.10 $ 34.30 At standard, each set of covers should require 4.0 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... zero variance). Input all amounts as positive values. 4
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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 1015 hours each month to produce 2,030 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)
Direct materials (8,400 yards)
Direct labor
Variable manufacturing overhead
Total
$ 59,276
$ 8,120
$ 3,857
During August, the factory worked 700 direct labor-hours and produced 1,500 sets of covers. The following actual costs were recorde
during the month
Per Set of
Covers
Total
$ 42,000
$ 6,300
$ 3,150
1 Materials price variance
1. Matenals quantity variance
2 Labor rate variance.
$ 29.20
4.00
2 Labor efficiency variance
3 Vansble overhead rate variance
3 Variable overhead efficiency vanance
1.90
$35.10
At standard, each set of covers should require 4.0 yards of material. All of the materials purchased during the month were used in
production)
Per Set of
Covers
$ 28.00
4.20
2.10
$ 34.30
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.
4
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