Data P10-3 Part II: Marvel Parts, Inc. manufactures auto accessories. One of the
ID: 2471873 • Letter: D
Question
Data P10-3 Part II: 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 2,850 hours each month to produce 1,900 sets of covers. MARVEL PARTS, INC. Direct labor-hours per month 2,850 Seat covers produced 1,900 Standard costs: Per Unit Total of Product Direct materials $42,560 $22.40 Direct labor $17,100 9.00 Variable manufacturing overhead $6,840 3.60 $35.00 Actual August production: Direct labor-hours for month 2,800 Seat covers produced 2,000 Actual costs during August: Per Unit Total of Product Direct materials $45,600 $22.80 Direct labor $18,200 9.10 Variable manufacturing overhead $7,000 3.50 $35.40 All of the materials purchased during the month were used in production. Actual Yards of material used in August 12,000 Standard material requirement per cover 5.6 Yards Required: Compute the following variances for August: 1. The materials price and quantity variances. 2. The labor rate and efficiency variances. 3. The variable overhead spending and efficiency variances. Data P10-3 Part II: 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 2,850 hours each month to produce 1,900 sets of covers. MARVEL PARTS, INC. Direct labor-hours per month 2,850 Seat covers produced 1,900 Standard costs: Per Unit Total of Product Direct materials $42,560 $22.40 Direct labor $17,100 9.00 Variable manufacturing overhead $6,840 3.60 $35.00 Actual August production: Direct labor-hours for month 2,800 Seat covers produced 2,000 Actual costs during August: Per Unit Total of Product Direct materials $45,600 $22.80 Direct labor $18,200 9.10 Variable manufacturing overhead $7,000 3.50 $35.40 All of the materials purchased during the month were used in production. Actual Yards of material used in August 12,000 Standard material requirement per cover 5.6 Yards Required: Compute the following variances for August: 1. The materials price and quantity variances. 2. The labor rate and efficiency variances. 3. The variable overhead spending and efficiency variances.Explanation / Answer
Material Price Variance = AQ (AP-SP) AQ = 12000 AP = $22.8 SP = $22.4 Price Variance = 12,000(22.8-22.4) = $4,800 (U) Material Quantity variance = SP (AQ-SQ) SP = $22.4 AQ = 12,000 SQ = 2000*5.6 = 11,200 Quantity variance = $22.4 (12,000-11,200) = $17,920 (U) Labour Spending Variance = AH (AR-SR) AH = 4500 AR = 9.1 SR = 9 Labour Spending Variance = 4500(9.1-9) = 450(U) Labour Efficiency variance = SR (AH-SH) SR = 9 AH = 2800 SH = 2850*2000/1900 = 3000 Efficiency variance = 9 (2800-3000) = 1800(F) Overhead Spending Variance = AQ (AP-SP) AQ = 12000 AP = $3.6 SP = $3.5 Overhead Spending Variance = 12000(3.6-3.5) = 1200(U) Overhead Efficiency variance = SP (AQ-SQ) SP = $3.5 AQ = 12,000 SQ = 2000*5.6 = 11,200 Efficiency variance = 3.5(12000-11200) = 2800(U)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.