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mheducation.com cuy>STUDENTS Chapter 10 significant memory Closing it may improve the responsiveness of your Mac heck my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Return to question Problem 10.9 Comprehensive Variance Analysis [LO10-1, LO10-2, LO10-3) Parts, Inc, manufactures auto accessories. One of the company's products is a set of seat covers that can be adjusted to fit for set for the seat covers, the factory should work 1040 hours each month to produce 2.080 sets of covers. The standard costs associated with this level of production are Direet materials 40-560 $19.50 7,280.50 variable manufacturing overhead (based on direet labor-hoars) 4,160200 During August, the factory worked only 600 direct labor-hours and produced 1800 sets of covers. The following actual costs were recorded during the month Direct materials (5,000 yards) Direct labor Variable sanufacturing overhead 5 6,660 3.70 5 4,140 2.30 At standard, each set of covers should require 2.5 yards of material All of the materials purchased during the month were used in 888 a 3 5 6 7 8 9 WE

Explanation / Answer

Solution 1:

Standard quantity of material for actual production = 1800*2.50 = 4500 Yard

Actual quantity of material = 5000 Yard

Standard price of material = $19.50/2.50 = $7.80 per yard

Actual price of material = $34,200 / 5000 = $6.84

Material price variance = (SP - AP) * AQ = ($7.80 - $6.84) * 5000 = $4,800 F

Material quantity variance = (SQ - AQ) * SR = (4500 - 5000) * $7.80 = $3,900 U

Solution 2:

Standard hours of direct labor = 1800 * 0.50 = 900 hours

Standard rate of direct labor = $7,280/1040 = $7 per hour

Actual hours of direct labor = 600 hours

Actual rate of direct labor = $6,660 / 600 = $11.10 per hour

Direct labor rate variance = (SR - AR) * AH = ($7 - $11.10) * 1600 = $2,460 U

Direct labor efficiency variance = (SH - AH) * SR = (900 - 600) * $7 = $2,100 F

Solution 3:

Standard hours of direct labor = 1800 * 0.50 = 900 hours

Standard rate of variable overhead = $4,160/1040 = $4 per hour

Actual hours of direct labor = 600 hours

Actual rate of variable overhead = $4,140 / 600 = $6.90 per hour

Variable overhead rate variance = (SR - AR) * AH = ($4 - $6.90) * 600 = $1,740 U

Variable overhead efficiency variance = (SH - AH) * SR = (900 - 600) * $4 = $1,200 F

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