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 995 hours each month to produce 1,990 sets of covers. The standard costs associated with this level of production are: Total Per Set of Covers Direct materials $ 47,362 $ 23.80 Direct labor $ 8,955 4.50 Variable manufacturing overhead (based on direct labor-hours) $ 2,388 1.20 $ 29.50 During August, the factory worked only 1,000 direct labor-hours and produced 2,300 sets of covers. The following actual costs were recorded during the month: Total Per Set of Covers Direct materials (8,800 yards) $ 50,600 $ 22.00 Direct labor $ 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. (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.) Can you help me with this problem with an explanation, please? Thank you :)
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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
| Total | Per Set of Covers | |
|---|---|---|
| Direct materials | $ 47,362 | $ 23.80 |
| Direct labor | $ 8,955 | 4.50 |
| Variable manufacturing |
$ 2,388 | 1.20 |
| $ 29.50 |
During August, the factory worked only 1,000 direct labor-hours and produced 2,300 sets of covers. The following actual costs were recorded during the month:
| Total | Per Set of Covers | |
|---|---|---|
| Direct materials (8,800 yards) | $ 50,600 | $ 22.00 |
| Direct labor | $ 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.
(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.)
Can you help me with this problem with an explanation, please? Thank you :)
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