Problem 10-9 (Algo) Comprehensive Variance Analysis [LO10-1, LO10-2, LO10-3] 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: Direct materials Direct labor Variable manufacturing overhead (based on direct labor-hours) Total $ 59,276 $ 8,120 $ 3.857 Direct materials (8,400 yards) Direct labor Variable manufacturing overhead. Per Set of Covers 29.20 4.00 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: Total $ 42,000 $ 6,300 $3,150 1.90 $35.10 Per Set of Covers $ 28.00 4.20 $ 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. 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
Problem 10-9 (Algo) Comprehensive Variance Analysis [LO10-1, LO10-2, LO10-3] 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: Direct materials Direct labor Variable manufacturing overhead (based on direct labor-hours) Total $ 59,276 $ 8,120 $ 3.857 Direct materials (8,400 yards) Direct labor Variable manufacturing overhead. Per Set of Covers 29.20 4.00 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: Total $ 42,000 $ 6,300 $3,150 1.90 $35.10 Per Set of Covers $ 28.00 4.20 $ 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. 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Problem 10-9 (Algo) Comprehensive Variance Analysis (LO10-1, LO10-2, LO10-3]
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:
Direct materials
Direct labor
Variable manufacturing overhead (based
on direct labor-hours)
Total
$59,276
$8,120
Direct materials (8,400 yards)
Direct labor
Variable manufacturing overhead
$ 3,857
Per Set of
Covers
8:29.20
4.00
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:
Total
$ 42,000
$6.300
$ 3,350
1.90
$35.10
Per Set of
Covers
$28.00
4.20
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.
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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F492121c0-3843-4585-9c4f-58f7a1b7b43d%2F2ee4b33a-8227-4a70-ad7a-d75aafa5550e%2Ft2g40p5_processed.png&w=3840&q=75)
Transcribed Image Text:S
Problem 10-9 (Algo) Comprehensive Variance Analysis (LO10-1, LO10-2, LO10-3]
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:
Direct materials
Direct labor
Variable manufacturing overhead (based
on direct labor-hours)
Total
$59,276
$8,120
Direct materials (8,400 yards)
Direct labor
Variable manufacturing overhead
$ 3,857
Per Set of
Covers
8:29.20
4.00
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:
Total
$ 42,000
$6.300
$ 3,350
1.90
$35.10
Per Set of
Covers
$28.00
4.20
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.
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
Transcribed Image Text:Direct materials (8.400 yards)
Direct labor
Variable manufacturing overhead
$ 42,000
$ 6,300
$ 3,150
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.
$ 28.00
4.20
2.10
$ 34.30
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.
1. Materials price variance
1. Materials quantity variance
(Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable. "U" for unfavorable,
and "None" for no effect (.e., zero variance). Input all amounts as positive values.)
2 Labor rate variance
2. Labor efficiency variance
3. Variable overhead rate variance
3. Vanable overhead efficiency variance
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