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 Direct labor Varlable manufacturing overhead (based on direct laboe hours) $ 32,340 $6,860 $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 Total Covers Direct materlals (6,000 yards) Direct labor $34,020 $7,770 $3,990 $ 16.20 3.70 1.90 $ 21.80 Variable manufacturing overhead 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. (Indicate the effect of each veriance by selecting "F for favoreble, "U" for unfavorable, and "None" for no effect (Le, zero varience). Input all emounts as positive values) 1. Materials price variance 4,950u 770U 350 1. Materials quandity varlance 12. Labor rate varlance 2. Labor efficiency variance 3. Variable overhead rate variance 3. Variable overhead efficiency varlance
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 Direct labor Varlable manufacturing overhead (based on direct laboe hours) $ 32,340 $6,860 $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 Total Covers Direct materlals (6,000 yards) Direct labor $34,020 $7,770 $3,990 $ 16.20 3.70 1.90 $ 21.80 Variable manufacturing overhead 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. (Indicate the effect of each veriance by selecting "F for favoreble, "U" for unfavorable, and "None" for no effect (Le, zero varience). Input all emounts as positive values) 1. Materials price variance 4,950u 770U 350 1. Materials quandity varlance 12. Labor rate varlance 2. Labor efficiency variance 3. Variable overhead rate variance 3. Variable overhead efficiency varlance
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Marvel Parts, Incorporated: Cost Analysis for Seat Covers**
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 its products. According to the standards set, 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:
| Cost Component | Total Cost | Cost Per Set of Covers |
|-------------------------------------|-------------|------------------------|
| Direct Materials (4,900 yards) | $18,340 | $9.35 |
| Direct Labor (980 hours) | $4,220 | $2.15 |
| Variable Manufacturing Overhead | $5,292 | $2.70 |
During August, the factory worked only 1,000 direct labor-hours and produced 2,400 sets of covers. The following actual costs were recorded during the month:
| Cost Component | Total Cost | Cost Per Set of Covers |
|-------------------------------------|-------------|------------------------|
| Direct Materials (6,000 yards) | $23,220 | $9.68 |
| Direct Labor (1,000 hours) | $3,770 | $1.57 |
| Variable Manufacturing Overhead | $5,210 | $2.17 |
At standard, each set of covers should require 2.5 yards of material. All materials purchased during the month were used in production.
**Required Tasks:**
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.**
| Variance Type | Amount | Effect |
|----------------------------------------|--------|--------|
| 1. Materials price variance | 4,696 | U |
| 2. Materials quantity variance | 770 | U |
| 3. Labor rate variance | 580 | F |
|
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