Chapter 9, Problem 24P

Comprehensive Variance Analysis
Marvel Parts. Inc.. manufactures auto accessones. One of the company’s products is a set of seat covets 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 2.850 hours each month to produce 1.900 sets of covers. The standard costs associated with this level of production are:

During August, the factory worked only 2.800 direct labor-hours and produced 2.000 sets of covers. The following actual costs were recorded during the month:

At standard, each set of covers should require 5.6 yards of material. All of the materials purchascd during the month were used in production.
Required:
Compute the following variances for August:
1. The materials price and quantity variances.
2. The labor rate and efficiency variances.
3. The variable overhead rate and efficiency variances.