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 1,015 hours each month to produce 2,030 sets of cover The standard costs associated with this level of production are: Per Set of Total Covers $ 59,276 $ 8,120 Direct materials Direct labor $ 29.20 4.00 Variable manufacturing overhead (based on direct labor-hours) $ 3,857 1.90

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 1,015 hours each month to produce 2,030 sets of cover The standard costs associated with this level of production are: Per Set of Total Covers $ 59,276 $ 8,120 Direct materials Direct labor $ 29.20 4.00 Variable manufacturing overhead (based on direct labor-hours) $ 3,857 1.90

Name: 1. Compute the materials price and quantity variances for August.2. Co
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Description: 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. Marvel Parts, Incorporated, manufactures auto ac

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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Concept explainers

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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Question

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.

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 1,015 hours each month to produce 2,030 sets of covers.
The standard costs associated with this level of production are:
Per Set of
Total
Covers
$ 59,276
$ 8,120
Direct materials
$ 29.20
Direct labor
Variable manufacturing overhead (based on
direct labor-hours)
4.00
$ 3,857
1.90
$ 35.10
During August, the factory worked only 700 direct labor-hours and produced 1,500 sets of covers. The following actual costs were
recorded during the month:
Per Set of
Total
Covers
Direct materials (8,400 yards)
Direct labor
$ 42,000
$ 6,300
$ 3,150
$ 28.00
4.20
variable manufacturing overhead
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.

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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