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 1,010 hours each month to produce 2,020 sets of covers. The standard costs associated with this level of production are: Direct materials Direct labor Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate complet Variable manufacturing overhead (based on direct labor-hours) Direct materials (8,100 yards) Direct labor Variable manufacturing overhead Total $ 36,360 $ 7,070 $ 3,030 During August, the factory worked only 1,080 direct labor-hours and produced 2,700 sets of covers. The following actual costs were recorded during the month: 76° Total Q Search $ 46,980 $ 9,990 $4,590 Per Set of Covers. $18.00 3.50 1.50 $23.00 At standard, each set of covers should require 2.0 yards of material. All of the materials purchased during the month were used in production. Per Set of Covers 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. O (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.) $ 17.40 3.70 1.70 $22.80 GO W P N
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 1,010 hours each month to produce 2,020 sets of covers. The standard costs associated with this level of production are: Direct materials Direct labor Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate complet Variable manufacturing overhead (based on direct labor-hours) Direct materials (8,100 yards) Direct labor Variable manufacturing overhead Total $ 36,360 $ 7,070 $ 3,030 During August, the factory worked only 1,080 direct labor-hours and produced 2,700 sets of covers. The following actual costs were recorded during the month: 76° Total Q Search $ 46,980 $ 9,990 $4,590 Per Set of Covers. $18.00 3.50 1.50 $23.00 At standard, each set of covers should require 2.0 yards of material. All of the materials purchased during the month were used in production. Per Set of Covers 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. O (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.) $ 17.40 3.70 1.70 $22.80 GO W P N
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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.
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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:## Cost Analysis for Seat Covers Production at Marvel Parts, Incorporated
Marvel Parts, Incorporated, manufactures auto accessories, including seat covers designed to fit almost any small car. The company adheres to a standard cost system for its products. According to the company's standards, to produce 2,020 sets of covers, the factory should work 1,010 direct labor-hours. The standard costs associated with this level of production are detailed below:
### Standard Costs
- **Direct Materials**:
- Total: $36,360
- Per Set of Covers: $18.00
- **Direct Labor**:
- Total: $7,070
- Per Set of Covers: $3.50
- **Variable Manufacturing Overhead** (based on direct labor-hours):
- Total: $3,030
- Per Set of Covers: $1.50
**Total Standard Cost Per Set**: $23.00
### Actual Costs for August
During August, the factory worked 1,080 direct labor-hours and produced 2,700 sets of covers. The actual costs recorded were:
- **Direct Materials (8,100 yards)**:
- Total: $46,980
- Per Set of Covers: $17.40
- **Direct Labor**:
- Total: $9,990
- Per Set of Covers: $3.70
- **Variable Manufacturing Overhead**:
- Total: $4,599
- Per Set of Covers: $1.70
**Total Actual Cost Per Set**: $22.80
### Notes
Each set of covers should require 2.0 yards of material. All purchased materials during August were used in production.
### Required Calculations
1. Compute the material 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.
**Indications for Variances**:
- "F" for favorable
- "U" for unfavorable
- "None" for zero effect
Input all amounts as positive values.
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