Cezto.mheducation.com/hm.tpx : Apps https://wwwmkewa 20.00 points Marvel Parts I

Question

Cezto.mheducation.com/hm.tpx : Apps https://wwwmkewa 20.00 points 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 1,005 hours each month to produce 2,010 sets of covers. The standard costs associated with this level of production are as follows Direct materials Direct labour Variable S 28,542 $14 20 S 8,040 4.00 3,618 1.80 $20,00 manufacturing overhead (based on direct labour hours) During August, the factory worked only 1,200 direct labour-hours and produced 2,600 sets of covers The following actual costs were recorded during the month Per Set Totalof Covers Direct materials (6,000 yards) Direct labour $ 35,100 $13 50 10.9204.20 S 5,460 210 Variable manufacturing overhead $19 80 At standard, each set of covers should require 2.00 yards of material All of the materials purchased during the month were used in production 144

Explanation / Answer

1. Materials Variances :

Materials price variance = ( Standard price per yard - Actual Price ) x Actual Quantity = $ ( 7.10 - 5.85) x 6,000 = $ 7,500 F

Materials quantity variance = ( Standard quantity for actual output - Actual quantity) x Standard price per yard = ( 2 x 2,600 - 6,000) x $ 7.10 = $ 5,680 U

2. Labor Variances:

Labor Rate Variance = ( Standard Labor Rate - Actual Rate ) x Actual Hours Used = ( 8,040/ 1,005 - 10,920 / 1,200) x 1,200 = $ 1,320 U

Labor Efficiency Variance = ( Standard hours for actual Output - Actual Hours Used ) Standard Labor Rate = ( 2,600 x 0.50 - 1,200) x $ 8 = $ 800 F

3. Variable Overhead Variances:

Materials Price Variance $ 7,500 F Materials Quantity Variance $ 5,680 U

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