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

Question

Problem 10-9 Comprehensive Variance Analysis [LO10-1, 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 smal 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 1,000 hours each month to produce 2,000 sets of covers. The standard costs associated with this level of production are: Per Set Total Covers Direct naterials Direct labor Variable manufacturing $41,400 $20.70 $8,000 4.00 overhead

Explanation / Answer

Material price variance = (6.9*7500-48000) = 3750 F

Material quantity variance = (2400*3-7500)*6.9 = 2070 U

Labour rate variance = (8*1050-10080) = 1680 U

Labour efficiency variance = (1200-1050)*8 = 1200 F

Variable overhead rate variance = (3.4*1050-5040) = 1470 U

Variable overhead efficiency variance = (1200-1050)*3.4 = 510 F

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