Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat...

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Accounting

Marvel Parts, Inc., manufactures auto accessories. One of thecompany’s products is a set of seat covers that can be adjusted tofit nearly any small car. The company has a standard cost system inuse for all of its products. According to the standards that havebeen set for the seat covers, the factory should work 1,045 hourseach month to produce 2,090 sets of covers. The standard costsassociated with this level of production are:
Total Per Set
of Covers
Direct materials $ 49,533 $ 23.70
Direct labor $ 10,450 5.00
Variable manufacturing overhead (based on directlabor-hours) $ 4,598 2.20
$ 30.90
During August, the factory worked only 800 direct labor-hoursand produced 1,900 sets of covers. The following actual costs wererecorded during the month:
Total Per Set
of Covers
Direct materials (6,500 yards) $ 44,460 $ 23.40
Direct labor $ 9,880 5.20
Variable manufacturing overhead $ 4,560 2.40
$ 31.00
At standard, each set of covers should require 3.0 yards ofmaterial. All of the materials purchased during the month were usedin production.
Required:
1. Compute the materials price and quantity variances forAugust.
2. Compute the labor rate and efficiency variances forAugust.
3. Compute the variable overhead rate and efficiency variancesfor August.

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4.1 Ratings (461 Votes)

All working forms part of the answer Workings Actual DATA for 1900 units Quantity AQ Rate AR Actual Cost Direct Material 6500 6840 4446000 Direct labor 800 1235 988000 Variable Overhead 800 570 456000 Standard DATA for 1900 units Quantity SQ See Answer

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	Total		Per Set of Covers
Direct materials	$	49,533	$	23.70
Direct labor	$	10,450		5.00
Variable manufacturing overhead (based on directlabor-hours)	$	4,598		2.20
			$	30.90

	Total		Per Set of Covers
Direct materials (6,500 yards)	$	44,460	$	23.40
Direct labor	$	9,880		5.20
Variable manufacturing overhead	$	4,560		2.40
			$	31.00