Question
In: Accounting
Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat...
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 1,075 hours each month to produce 2,150 sets of covers. The standard costs associated with this level of production are:
| Total | Per Set of Covers |
||||
| Direct materials | $ | 54,825 | $ | 25.50 | |
| Direct labor | $ | 10,750 | 5.00 | ||
| Variable manufacturing overhead (based on direct labor-hours) | $ | 5,375 | 2.50 | ||
| $ | 33.00 | ||||
During August, the factory worked only 800 direct labor-hours and produced 2,500 sets of covers. The following actual costs were recorded during the month:
| Total | Per Set of Covers |
||||
| Direct materials (12,500 yards) | $ | 58,750 | $ | 23.50 | |
| Direct labor | $ | 13,000 | 5.20 | ||
| Variable manufacturing overhead | $ | 7,000 | 2.80 | ||
| $ | 31.50 | ||||
At standard, each set of covers should require 3.0 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.
(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.)
Solutions
Expert Solution
| Data for Resource Variance | ||||||||||||
| Budgeted (2150 Set Covers) | Standard(2500 Set Covers) | Actual(2500 Set Covers) | ||||||||||
| Quantity/Hrs | Rate | Amount | Quantity/Hrs | Rate | Amount | Quantity/Hrs | Rate | Amount | ||||
| Material | 6450 | 8.5 | 54825 | 7500 | 8.5 | 63750 | 12500 | 4.7 | 58750 | |||
| Labour | 1075 | 10 | 10750 | 1250 | 10 | 12500 | 800 | 16.25 | 13000 | |||
| V. Overhead | 1075 | 5 | 5375 | 1250 | 5 | 6250 | 800 | 8.75 | 7000 | |||
| Total | 70950 | 82500 | 78750 | |||||||||
| 1. Computation of Variances | ||||||||||||
| a) | Material Price Variance = (Standard Price - Actual Price ) Actual Quantity Purchased | |||||||||||
| = (8.5 - 4.7 )* 12500 | ||||||||||||
| 47500 | F | |||||||||||
| Material Quantity Variance = (Standard quantity - Actual Quantity ) Standard Price | ||||||||||||
| = (7500-12500 )*8.5 | ||||||||||||
| -42500 | U | |||||||||||
| b) | Labour Rate Variance = (Standard Rate - Actual Rate) Actual Hrs Worked | |||||||||||
| = (10-16.25)* 800 | ||||||||||||
| -5000 | U | |||||||||||
| Labour Efficiency Variance = (Standard Hrs. - Actual Hrs) Standard Rate | ||||||||||||
| = (1250-800 ) *10 | ||||||||||||
| 4500 | F | |||||||||||
| c) | Variable Overhead(OH) Rate Variance = (Standard Rate - Actual Rate ) Actual Machine Hrs Worked | |||||||||||
| =(5-8.75) * 800 | ||||||||||||
| -3000 | U | |||||||||||
| Variable OH Efficiency Variance = (Standard hrs. - Actual Hrs) Standard Rate | ||||||||||||
| = (1250-800)*5 | ||||||||||||
| 2250 | F | |||||||||||
 ekkarill92 answered 1 year agoRelated SolutionsMarvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat...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 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 1,030 hours each
month to produce 2,060 sets of covers. The standard costs
associated with this level of production are:
Total
Per Set
of Covers...
Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat...
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 995 hours
each month to produce 1,990 sets of covers. The standard costs
associated with this level of production are:
Total
Per...
Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat...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 1,005 hours
each month to produce 2,010 sets of covers. The standard costs
associated with this level of production are:
Total
Per Set...
Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat...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 1,000 hours
each month to produce 2,000 sets of covers. The standard costs
associated with this level of production are:
Total
Per Set...
Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat...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 1,045 hours
each month to produce 2,090 sets of covers. The standard costs
associated with this level of production are:
Total
Per Set...
Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat...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 1,035 hours
each month to produce 2,070 sets of covers. The standard costs
associated with this level of production are:
Total
Per Set...
Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat...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 1,075 hours
each month to produce 2,150 sets of covers. The standard costs
associated with this level of production are:
Total
Per Set...
Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat...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 1,005 hours
each month to produce 2,010 sets of covers. The standard costs
associated with this level of production are:
Total
Per Set...
Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat...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 1,230 hours
each month to produce 2,050 sets of covers. The standard costs
associated with this level of production are:
Total
Per Set...
Marvel Parts Inc. manufactures auto accessories. One of the company’s products is a set of seat...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 1,035 hours
each month to produce 2,070 sets of covers. The standard costs
associated with this level of production are as follows:
Total...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
ADVERTISEMENT
|