Marvel Parts, Incorporated, manufactures auto accessories. One of the company's products is a set of seat covers that can be adjustedto fit nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that havebeen set for the seat covers, the factory should work 980 hours each month to produce 1.960 sets of covers. The standard costsassociated with this level of production are:Per Set ofCovers$ 16.503.50TotalDirect materialsDirect laborVarlable manufacturing averhead (based ondirect labor-hours)$ 32,340$6,860$1,9401.00$ 21.00During August, the factory worked only 1,000 direct labor-hours and produced 2100 sets of covers. The following actual costs wererecorded during the month:Per Set ofTotalCoversDirect materlals (6,000 yards)Direct laborVariable manufacturing overhead$ 34,020$7,770$3,990$ 16.203.701.90$ 21.00At standard, each set of covers should require 25 yards of material. All of the materials purchased during the month were used inproduction.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 verience by selecting "F for favoreble, "U" for unfavorable, and "None" for no effect (Le, zerovariance). Input all amounts as positive values.)1. Materials price variance1. Materials quantity variance4.950u770U3502 Labor rate varlance2. Labor efficiency variance3. Variable overhead rate variance3. Variable overhead efficiency variance

Standard Costing Standard costing is a concept where the expected cost for an actual cost is substituted in the accounting books and any difference between expected and actual costs is recorded as variances.1. Computation of material price and quantity variances for August : Given, Actual Quantity (AQ) = 6,000 yards Standard Quantity (SQ) = (2.50 yards x 2,100 sets) = 5,250 yards Actual price (AP) = ($34,020/6,000 yards) = $5.67 Standard price (SP) = ($16.50/2.50) = $6.60 Material price variance = Actual quantity x (Standard price - Actual price) Material price variance = 6,000 x ($6.60 - $5.67) Material price variance = $5,580 (Favorable) Material Quantity variance = (Standard quantity - Actual quantity) x Standard price Material Quantity variance = (5,250 - 6,000) x $6.60 Material Quantity variance = $4,950 (Unfavorable)2. Computation of labor rate and efficiency variances for August: Given, Actual hours (AH) = 1,000 hours Standard hours (SH) = (2,100 sets/1,960 sets x 980 hours) = 1,050 hours Actual labor rate = ($7,770/1000 sets) = $7.77 Standard labor rate = ($6,860/980 hours) = $7.00 Labor rate variance = Actual hours x (Actual rate - Standard rate) Labor rate variance = 1,000 hours x ($7.77 - $7.00) Labor rate variance = $770 (Unfavorable) Labor efficiency variance = (Standard hours - Actual hours) x Standard rate Labor efficiency variance = (1,050 hours - 1,000 hours) x $7.00 Labor efficiency variance = $350 (Favorable)3. Computation of variable overhead rate and efficiency variance for August: Given, Actual hours worked = 1,000 hours Standard variable overhead rate = ($1,960/980 hours) = $2.00 Actual variable overhead = $3,990 Standard hours = (2,100 sets/1,960 sets x 980 hours) = 1,050 hours Variable overhead rate = (Actual hours x Standard variable overhead rate) - (Actual variable overhead) Variable overhead rate = (1,000 hours x $2.00) - $3,990 Variable overhead rate = 1,990 (Unfavorable) Variable overhead efficiency variances = (Standard hours - Actual hours) x Standard variable overhead rate Variable overhead efficiency variances = (1,050 hours - 1,000 hours) x $2.00 Variable overhead efficiency variances = $100 (Favorable) 1. Material price variance 5,580 F 2. Material quantity variance 4,950 U 3. Labor rate variance 770 U 4. Labor efficiency variance 350 F 5. Variable overhead rate variance 1,990 U 6. Variable overhead efficiency variance 100 F