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 980 hours each month to produce 1,960 sets of covers. The standard costs associated with this level of production are: Direct materials Direct labor Variable manufacturing overhead (based on direct labor-hours) Total $ 32,340 $ 6,860 $ 1,960 Direct materials (6,000 yards) Direct labor Variable manufacturing overhead Per Set of Covers $16.50 3.50 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 $ 34,020 $ 7,770 $ 3,990 1.00 $ 21.00 Per Set of Covers $16.20 3.70 1.90 $ 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. (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.)
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 980 hours each month to produce 1,960 sets of covers. The standard costs associated with this level of production are: Direct materials Direct labor Variable manufacturing overhead (based on direct labor-hours) Total $ 32,340 $ 6,860 $ 1,960 Direct materials (6,000 yards) Direct labor Variable manufacturing overhead Per Set of Covers $16.50 3.50 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 $ 34,020 $ 7,770 $ 3,990 1.00 $ 21.00 Per Set of Covers $16.20 3.70 1.90 $ 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. (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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
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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 980 hours each month to produce 1,960 sets of covers. The standard costs associated
with this level of production are:
Direct materials
Direct labor
Variable manufacturing overhead (based
on direct labor-hours)
Total
$ 32,340
$ 6,860
$ 1,960
Direct materials (6,000 yards)
Direct labor
Variable manufacturing overhead
Per Set of
Covers
$16.50
3.50
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
$ 34,020
$ 7,770
$ 3,990
1.00
$ 21.00
Per Set of
Covers
$16.20
3.70
1.90
$ 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 vařiances 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.)
Transcribed Image Text:es
vaLiaoke maturny uVELIiedu (uaaரப்
on direct labor-hours)
Direct materials (6,000 yards)
Direct labor
Variable manufacturing overhead
$ 1,960
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
$ 34,020
$ 7,770
$ 3,990
1.00
$ 21.00
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
Per Set of
Covers
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.
$ 16.20
3.70
1.90
$ 21.80
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.
U
U
F
U
(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.)
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