Problem 10-9 Comprehensive Variance Analysis [L010-1, LO10-2, LO10-3] Marvel Par

Question

Problem 10-9 Comprehensive Variance Analysis [L010-1, LO10-2, LO10-3] 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. The standard costs associated with this level of production are Per Set of Total Covers Direct materials Direct labor Variable manufacturing overhead $42,560 $22.40 $51,300 27.00 (based on direct labor-hours) 6,840 3.60 $53.00 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 Per Set Total of Covers Direct materials (12,000 yards) $45,600 $22.80 $49,000 24.50 Variable manufacturing overhead 7,0003.50 $50.80 Direct labor each set of covers should require 5.6 yards of material. All of the materials purchased during the month were used in nroductinn K Prev 2 of 3 Next oe?? earch

Explanation / Answer

1) Material price variance = (4*12000-45600) = 2400 F

Material quantity variance = (2000*5.6-12000)*4 = 3200 U

2) Labour rate variance = (18*2800-49000) = 1400 F

Labour efficiency variance = (2000*1.5-2800)*18 = 3600 F

3) Variable overhead rate variance = (2.4*2800-7000) = 280 U

Variable overhead efficiency variance = (3000-2800)*2.4 = 480 F

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