Question

Marvel Parts, Inc., 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 1.010 hours each month to produce 2.020 sets of covers. The standard costs associated with this level of production are: Per Set of Covers 18.00 Total 5.360 7,070 $ $ Direct materials Direct labor Variable manufacturing overhead (based on direct labor-hours) $ 3,30 1.50 During August, the factory worked only 1080 direct labor hours and produced 2700 sets of covers. The following actual costs were recorded during the month: Direct materials (8,100 yards) Direct labor Variable manufacturing overhead Total $ 46,950 $ 9,990 $ 4,590 Per Set of Covers $17.00 3.70 1.70 At standard, each set of covers should require 20 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

Answer 1

Answer: malolal variance- SP X SQ AP XAQ SP. xona $ 46,980 $18 (2-700x 2) $18 X 8100 $ 72900 = $ 48,600 • nastal Pn đe Vestance - (ÁP X + 2) - ( ) ( x CP) = $46,980 – $72,900 = $ 25920 Favourable. malou hal Quantihy karviance (SPXAQ) - CSPY SQ) $72900 - $48600 a $24300 Un Favouable

Labour variances AHX SR SHY. SR AH KAR 1350 x $1 $ 9990 1080 eto X $7 perhour 1 7560 = $ kogoo = $ 9450 1010 standard houy - 0.5 standard houy per set, 2020 sets = $7 standard rate per hour $305 standard cost per set 0.5 standard hours per set set = 1350 standard hours * * 2700 a 700 sets XO sets X 0.5 standard hours per · 7560 Labour rate variance = (AH XAR) - (A4 xse) 2 $9990 - $4900 2430 ert on Favourable = $ Labourn Efficiency variance = (SRX AH) -( SRXSH) 1560 $ oo - $ 9452 1890 tavowiable. $useo en favourable.

Variable Overhead variances :- SH XSR Анхар AH XSR 1350 × $34 $4590 1080 x $3" $4050 - $3240 * : +2 standard ratē per hour $ 1050 standard cost per sel $ 0.5 standard hours perset (AH CAH X SRO variable over head rate variance = $4590 - 3240 2 $1350 Un favourable (SRXAH) – CSR XSH) E yariable overhead efficiency yariance = $3240 - $4050 = $810 Favourable. = x =