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 uses a standard cost system for all of its products. According to the standards that have been set for the seat covers, the factory should work 2,850 hours each month to produce 1,900 sets of covers. The standard costs associated with this level of production are: Direct materials Total $ 42,560 Direct labor $ 51,300 Variable manufacturing overhead (based on direct labor-hours) $ 6,840 Per Set of Covers $ 22.40 27.00 3.60 $ 53.00 During August, the factory worked only 2,800 direct labor-hours and produced 2,000 sets of covers. The following actual costs were recorded during the month: Direct materials (12,000 yards) Direct labor Variable manufacturing overhead Total $ 45,600 $ 49,000 $ 7,000 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. (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.) 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. One of the company's products is a set of seat covers that can be adjusted to fit nearly any small car. The company uses a standard cost system for all of its products. According to the standards that have been set for the seat covers, the factory should work 2,850 hours each month to produce 1,900 sets of covers. The standard costs associated with this level of production are: Direct materials Total $ 42,560 Direct labor $ 51,300 Variable manufacturing overhead (based on direct labor-hours) $ 6,840 Per Set of Covers $ 22.40 27.00 3.60 $ 53.00 During August, the factory worked only 2,800 direct labor-hours and produced 2,000 sets of covers. The following actual costs were recorded during the month: Direct materials (12,000 yards) Direct labor Variable manufacturing overhead Total $ 45,600 $ 49,000 $ 7,000 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. (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.) 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 uses a standard cost system for all of its products. According to the standards that have been
set for the seat covers, the factory should work 2,850 hours each month to produce 1,900 sets of covers. The standard costs
associated with this level of production are:
Direct materials
Total
$ 42,560
Direct labor
$ 51,300
Variable manufacturing overhead (based
on direct labor-hours)
$ 6,840
Per Set of
Covers
$ 22.40
27.00
3.60
$ 53.00
During August, the factory worked only 2,800 direct labor-hours and produced 2,000 sets of covers. The following actual costs were
recorded during the month:
Direct materials (12,000 yards)
Direct labor
Variable manufacturing overhead
Total
$ 45,600
$ 49,000
$ 7,000
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.
(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.)
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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