9 Marvel Parts nearly any small car The company has a standa set for the seat co

Question

9 Marvel Parts nearly any small car The company has a standa set for the seat covers, the factory should work 1,005 hours each month to produce 2,010 sets of c associated with this level of production are One of the co ny's products is a set of seat covers that can be a system in use for all of its products. According to the standards that have b to overs. The standard costs birect labor based on During August, the factory worked only 1.200 direct labor-hours and produced 2.600 sets of covers The following actual costs were ded during the month 5 35,100 $13.50 At standard, each set of covers should require 20 yards of material ll of the materials purchased during the month were used in production 1. Compute the materials price and quantity variances for August 2 Compute the labor rate and efficiency var for August (Indicate the effect of each variance by selecting "F" for fovorable, "U" for unfavorable, and "None" for no effect fi.e., zero Prev9 of 11Next

Explanation / Answer

Solution 1:

Standard quantity of material for actual production = 2600*2 = 5200 yard

Actual quantity of material = 6000 yard

Standard price of material = $28,542 / 4020 = $7.10

Actual price of material = $35,100/6000 = $5.85

Material price variance = (SP - AP) * AQ Purchased = ($7.10 - $5.85) * 6000 = $7,500 F

Material quantity variance = (SQ - AQ) * SR = (5200 - 6000) * $7.1= $5,680 U

Solution 2:

Standard hours of direct labor = 2600 * 0.50 = 1300 hours

Standard rate of direct labor = $8,040/1005 = $8

Actual hours of direct labor = 1200 hours

Actual rate of direct labor =$10,920 / 1200 = $9.10 per hour

Direct labor rate variance = (SR - AR) * AH = ($8 - $9.10) * 1200 = $1,320 U

Direct labor efficiency variance = (SH - AH) * SR = (1300 - 1200) * $8 = $800 F

Solution 3:

Standard hours of direct labor = 2600 * 0.5 = 1300 hours

Standard rate of variable overhead = $3,618 / 1005 = $3.60

Actual hours of direct labor = 1200 hours

Actual rate of variable overhead = $5,460 / 1200 = $4.55 per hour

variable overhead rate variance = (SR - AR) * AH = ($3.60 - $4.55) * 1200 = $1,140 U

Variable overhead efficiency variance = (SH - AH) * SR = (1300 - 1200) * $3.60 = $360 F

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