Check my work 6 Marvel Parts, Inc., manufactures auto accessories. One of the co
ID: 2563222 • Letter: C
Question
Check my work 6 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 1,065 hours each month to produce 2,130 sets of covers. The standard costs associated with this level of production are: points Per Set Total of Covers Skipped Direct materials Direct labor Variable manufacturing overhead (based $35,358 $16.60 4.00 $ 8,520 3,1951.50 $22.10 eBook on direct labor-hours) Print During August, the factory worked only 1,050 direct labor-hours and produced 2,700 sets of covers. The following actual costs were recorded during the month: Per Set Total of Covers Direct materials (6,000 yards) Direct labor $43,740 $16.20 4.20 2.10 $22.50 $11,340 $ 5,670 Variable manufacturing overhead At standard, each set of covers should require 2.0 yards of material. All of the materials purchased during the month were used in production. Required: 1. Compute the materials price and quantity variances for August. 2. Compute the labor rate and efficiency variances for August. 3. Compute the variable overhead rate and efficiency variances for August. Indicate the effect of each variance bv selectina"F" for favorable. "U" for unfavorable. and "None" for no effect i.e.. zeroExplanation / Answer
1. MPV = (Actual material price - Standard material price) Actual material used
= ( 43740/6000 - 16.60/2) 6000 = (7.29 - 8.30) 6000 = $6060 F
MQV = (Standard material used for actual units - Actual usage) Standard material price
= ( 2700*2 - 6000 ) (16.60/2) =( 5400 - 6000 ) * 8.30 = $4980 U
2. LRV = (Actual labor rate - Standard labor rate) Actual labor hours used
= ( 11340/1050 - 8520/1065 ) 1050 = (10.80 - 8) 1050 = $2940 U
LEV = (Standard labor hours used for actual units - Actual hours used) Standard labor rate
= ( 2700*0.50 - 1050 ) (8520/1065) =( 1350 - 1050 ) * 8 = $2400 F
3. VORV = (Actual VO rate - Standard VO rate) Actual labor hours used
= ( 5670/1050 - 3195/1065 ) 1050 = (5.40 - 3) 1050 = $2520 U
VOEV = (Standard labor hours used for actual units - Actual hours used) Standard VO rate
= ( 2700*0.50 - 1050 ) (3195/1065) =( 1350 - 1050 ) * 3 = $900 F