Question

Marvel Parts, Inc., manufactures nuto accessories. One of the company's products is a set of seat covers that can be adjusted to 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: Per Set of Total Covers 642,560 $22.40 651,300 27.00 Direct materials Direct labor Variable manufacturing overhead (based on direct Labor-hours) 6 6,840 3.60 653.00 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: Direct materials (12,000 yards) Direct labor Variable manufacturing overhead Per Set Total of Covers 645,600 422.80 $49,000 24.50 $ 7,000 3.50 550.80 At standard, each set of covers should require 5.6 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 for favorable, "U" for unfavorable, and "None" for no effectie, sero indicate the effect of each verlance by selecting verlence). Input all amounts os positive values.)

Answer 1

1.	Standard price of materials per yard = Standard direct materials per set of covers / Standard quantity of materials per set of covers = 22.40 / 5.6	4
	Actual materials rate per yard = Actual total materials cost / Actual materials quantity = 45600 / 12000	3.8
	Materials price variance = ( Standard price - Actual price ) * Actual quantity = ( 4 - 3.8 ) * 12000	2400	F
	Standard quantity of materials for 2000 sets of covers = 2000 * 5.6	11200
	Materials quantity variance = ( Standard quantity - Actual quantity ) * Standard price = ( 11200 - 12000 ) * 4	3200	U
2.
	Standard labor hours per sets of cover = Standard hours for 1900 sets of covers / 1900 = 2850 / 1900	1.5
	Standard rate of labor = Standard direct labor per set of cover / Standard labor hours per sets of covers = 27.00 / 1.5	18
	Actual rate of labor = Actual total direct labor cost / Actual direct labor hours worked = 49000 / 2800	17.50
	Labor rate variance = ( Standard rate - Actual rate ) * Actual hours = ( 18 - 17.50 ) * 2800	1400	F
	Standard direct labor hours for 2000 sets of covers = 2000 * Standard labor hours per sets of covers = 2000 * 1.5	3000
	labor efficiency variance = ( Standard hours - Actual hours ) * Standard rate = ( 3000 - 2800 ) * 18	3600	F
3.
	Standard rate of variable overhead = Standard cost of variable overhead per sets of cover / Standard labor hours per sets of cover = 3.60 / 1.50	2.4
	Actual rate of variable overhead = Actual total variable overhead cost / Actual direct labor hours worked = 7000 / 2800	2.5
	Variable overhead rate variance = ( Standard rate - Actual rate ) * Actual hours = ( 2.4 - 2.5 ) * 2800	280	U
	Variable overhead efficiency variance = ( Standard hours - Actual hours ) * Standard rate = ( 3000 - 2800 ) * 2.4	480	F