Marvel Parts, Incorporated, 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 980 hours each month to produce 1,960 sets of covers. The standard costs associated with this level of production are: Per Set of Covers $ 16.50 3.50 Total Direct materials $ 32, 40 $.6.860 Direct labor Variable manufacturing overhead (based on direct labor-hours) $1,960 1.00 $ 21.00 During August, the factory worked only 1,000 direct labor-hours and produced 2100 sets of covers. The following actual costs were recorded during the month: Per Set of Covers $ 16.20 3.70 Total Direct materials (6,000 yards) Direct labor Variable manufacturing overhead $ 34,020 $7,770 $ 3,990 1.90 $ 21.80 At standard, each set of covers should require 25 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. favornble. "U" for unfavorable, and "None" for no effect (Le., zero
Marvel Parts, Incorporated, 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 980 hours each month to produce 1,960 sets of covers. The standard costs associated with this level of production are: Per Set of Covers $ 16.50 3.50 Total Direct materials $ 32, 40 $.6.860 Direct labor Variable manufacturing overhead (based on direct labor-hours) $1,960 1.00 $ 21.00 During August, the factory worked only 1,000 direct labor-hours and produced 2100 sets of covers. The following actual costs were recorded during the month: Per Set of Covers $ 16.20 3.70 Total Direct materials (6,000 yards) Direct labor Variable manufacturing overhead $ 34,020 $7,770 $ 3,990 1.90 $ 21.80 At standard, each set of covers should require 25 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. favornble. "U" for unfavorable, and "None" for no effect (Le., zero
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:**Problem Statement:**
At standard, each set of covers should require 2.5 yards of material. All of the materials purchased are 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.
**Instructions:**
Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and “N” for no variance. Input all amounts as positive values.
**Variance Table:**
1. Materials price variance
- Input box for value
- Dropdown for effect (F/U/N)
2. Materials quantity variance
- Input box for value
- Dropdown for effect (F/U/N)
3. Labor rate variance
- Input box for value
- Dropdown for effect (F/U/N)
4. Labor efficiency variance
- Input box for value
- Dropdown for effect (F/U/N)
5. Variable overhead rate variance
- Input box for value
- Dropdown for effect (F/U/N)
6. Variable overhead efficiency variance
- Input box for value
- Dropdown for effect (F/U/N)
Transcribed Image Text:Marvel Parts, Incorporated, 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 980 hours each month to produce 1,960 sets of covers. The standard costs associated with this level of production are:
| | Total | Per Set of Covers |
|-----------------------|------------|-----------------|
| Direct materials | $32,340 | $16.50 |
| Direct labor | $7,840 | $4.00 |
| Variable manufacturing overhead (based on direct labor-hours) | $1,960 | $1.00 |
| **Total** | | **$21.00** |
During August, the factory worked only 1,000 direct labor-hours and produced 2,100 sets of covers. The following actual costs were recorded during the month:
| | Total | Per Set of Covers |
|-----------------------|--------------|------------------|
| Direct materials (6,000 yards) | $34,020 | $16.20 |
| Direct labor | $7,770 | $3.70 |
| Variable manufacturing overhead | $2,190 | $1.04 |
| **Total** | | **$21.80** |
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.
Use “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance).
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