10-9 6 Help Save & Exit Check my work Marvel Parts, Inc., manufactures auto acce
ID: 2517482 • Letter: 1
Question
10-9 6 Help Save & Exit Check my work Marvel Parts, Inc., manufactures auto accessories. nearly any small car. The company has a standard cost system set for the seat covers, the factory should work 630 hours each month to produce 2,100 sets of covers. The standard costs a with this level of production are: One of the company's products is a set of seat covers that can be adjusted to fit in use for all of its products. According to the standards that have been ssociated Per Total of Covers 38,640 $18.40 6,300 3.00 Direct labor Variable manufacturing overhead (based on direct labor-hours) 3,150 .50 es $22.90 During August, the factory worked only 500 direct labor-hours and produced 2.000 sets of covers. The following actual costs recorded during the month: were Per Set Total of Direct materials (5,000 yards) Direct labor Variable manufacturing overhead $36,000 $18.00 $6,400 3.20 4,400 2.20 $23.40 At standard, each set of covers should require 2.3 yards of material. All of the materials purchased during the month were used in Required: Prev 1 of NextExplanation / Answer
1.
Standard price of material = $ 18.40/2.3 = $ 8 per yard
Actual price of material = $ 36,000/5,000 = $ 7.2 per yard
Material price variance = (Actual price – Standard price) x Actual quantity
= ($ 7.2 - $ 8) x 5,000 = - $ 0.8 x 5,000 = - $ 4,000 F
Standard Quantity of material for actual production = 2.3 x 2,000 = 4,600
Materials quantity variance = (Actual Quantity – Standard Quantity) x Standard Price
= (5,000 – 4,600) x $ 8 = 400 x $ 8 = $ 3,200 U
2.
Standard labor rate = $ 6,300/630 = $ 10 per hour
Actual labor rate = $ 6,400/500 = $ 12.80
Labor rate Variance = (Actual rate - Standard rate) × Actual hour
= ($ 12.80 - $ 10) x 500 = $ 2.80 x 500 = $ 1,400 U
Standard hours per unit of actual production = 630/2,100 = 0.3 hour
Standard hours for 2,000 units of actual production = 0.3 x 2,000 = 600 hour
Labor efficiency Variance = (Actual hours - Standard hours) x Standard rate
= (500 – 600) x $ 10 = - 100 x $ 10 = - $ 1,000 F
3.
Actual overhead rate = Actual overhead cost /Actual labor hours = $ 4,400/500
= $ 8.8
Standard overhead rate = Standard overhead cost /Standard labor hours = $ 3,150/630
= $ 5
Variable overhead rate variance
= Actual hours worked x (Actual overhead rate - standard overhead rate)
= 500 x ($ 8.8 - $ 5) = 500 x $ 3.80 = $ 1,900 U
Variable overhead efficiency variance
= Standard overhead rate x (Actual hours - Standard hours)
= $ 5 x (500 – 600) = $ 5 x (– 100) = - $ 500 F
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