9. value: 3.36 points Marvel Parts, Inc., manufactures auto accessories. One of
ID: 2573518 • Letter: 9
Question
9.
value:
3.36 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 1,070 hours each month to produce 2,140 sets of covers. The standard costs associated with this level of production are:
During August, the factory worked only 1,000 direct labor-hours and produced 2,400 sets of covers. The following actual costs were recorded during the month:
At standard, each set of covers should require 1.50 yards of material. All of the materials purchased during the month were used in production.
Compute the materials price and quantity variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)
Compute the labor rate and efficiency variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)
Compute the variable overhead rate and efficiency variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)
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 1,070 hours each month to produce 2,140 sets of covers. The standard costs associated with this level of production are:
Explanation / Answer
1) Compute the materials price and quantity variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)
Material price variance = (standard price-actual price) actual quantity
= (8.4*6000-29280)
Material price variancce = 21120 F
Material quantity variance = (standard quantity-actual quantity)standard price
= (2400*1.5-6000)8.4
Material quantity variance = 20160 U
2) Compute the labor rate and efficiency variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)
Labour rate variance = (standard rate-actual rate)actual hours
= (11*1000-13680)
Labour rate variance = 2680 U
Labour efficiency variance = (standard hours-actual hours)standard rate
= (2400*.50-1000)11
Labour efficiency varinace = 22000 F
3) Compute the variable overhead rate and efficiency variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)
Variable overhead rate variance = (standard rate-actual rate)actual hours
= (3.4*1000-5760)
Variable overhead rate variance = 2360 U
Variable overhead efficiency variance = (standard hours-actual hours)standard rate
= (2400*.50-1000)3.4
Variable overhead efficiency varinace = 680 F
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