Problem 10-9 Comprehensive Variance Analysis [LO10-1, LO10-2,LO10-3]
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 1,010 hourseach month to produce 2,020 sets of covers. The standard costsassociated with this level of production are:
| Total | Per Set
of Covers |
| Direct materials | $ | 36,360 | $ | 18.00 | |
| Direct labor | $ | 7,070 | | 3.50 | |
| Variable manufacturing overhead (based on directlabor-hours) | $ | 3,030 | | 1.50 | |
| | | $ | 23.00 | |
|
During August, the factory worked only 1,080 direct labor-hoursand produced 2,700 sets of covers. The following actual costs wererecorded during the month:
| Total | Per Set
of Covers |
| Direct materials (8,100 yards) | $ | 46,980 | $ | 17.40 | |
| Direct labor | $ | 9,990 | | 3.70 | |
| Variable manufacturing overhead | $ | 4,590 | | 1.70 | |
| | | $ | 22.80 | |
|
At standard, each set of covers should require 2.0 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.
(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.)
