Marvel Parts, Incorporated, manufactures auto accessories. One of the company's products is a set of seat covers that can be adjus to fit nearly any small car. The company uses a standard cost system for all of its products. According to the standards that have bee set for the seat covers, the factory should work 990 hours each month to produce 1,980 sets of covers. The standard costs associat with this level of production are: Direct materials Total $ 45,738 Direct labor $ 6,930 Variable manufacturing overhead (based on direct labor-hours) $ 3,168 Per Set of Covers $ 23.10 3.50 1.60 $ 28.20 During August, the factory worked only 1,000 direct labor-hours and produced 2,500 sets of covers. The following actual costs were recorded during the month: Direct materials (10,000 yards) Direct labor Variable manufacturing overhead Total Per Set of Covers $ 56,000 $ 9,250 $ 4,500 $ 22.40 3.70 1.80 $ 27.90 At standard, each set of covers should require 3.3 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
Marvel Parts, Incorporated, manufactures auto accessories. One of the company's products is a set of seat covers that can be adjus to fit nearly any small car. The company uses a standard cost system for all of its products. According to the standards that have bee set for the seat covers, the factory should work 990 hours each month to produce 1,980 sets of covers. The standard costs associat with this level of production are: Direct materials Total $ 45,738 Direct labor $ 6,930 Variable manufacturing overhead (based on direct labor-hours) $ 3,168 Per Set of Covers $ 23.10 3.50 1.60 $ 28.20 During August, the factory worked only 1,000 direct labor-hours and produced 2,500 sets of covers. The following actual costs were recorded during the month: Direct materials (10,000 yards) Direct labor Variable manufacturing overhead Total Per Set of Covers $ 56,000 $ 9,250 $ 4,500 $ 22.40 3.70 1.80 $ 27.90 At standard, each set of covers should require 3.3 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
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 990 hours each month to produce 1,980 sets of covers. The standard costs associated
with this level of production are:
Direct materials
Total
$ 45,738
Direct labor
$ 6,930
Variable manufacturing overhead (based on
direct labor-hours)
$ 3,168
Per Set of
Covers
$ 23.10
3.50
1.60
$ 28.20
During August, the factory worked only 1,000 direct labor-hours and produced 2,500 sets of covers. The following actual costs were
recorded during the month:
Direct materials (10,000 yards)
Direct labor
Variable manufacturing overhead
Total
$ 56,000
$ 9,250
$ 4,500
Per Set of
Covers
$ 22.40
3.70
1.80
$ 27.90
At standard, each set of covers should require 3.3 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.)
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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