Please signify the answers clearly end of the question. Marvel Parts, Inc., manu

Question

Please signify the answers clearly end of the question. 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 990 hours each month to produce 1,980 sets of covers. The standard costs associated with this level of production are Per Set Total of Covers 45,738 $23.10 Direct materials Direct labor Variable manufacturing overhead S 6.930 3.5 based on direct labor-hours) 3,168 1.60 $28.20 During August, the factory worked only 1,000 direct labor-hours and produced 2,500 sets of covers. The following actual costs were recorded during the month Per Set Total of Covers Direct materials (10,000 yards) Direct labor 56,000 $22.40 9,250 3.70 4,500180 Variable manufacturing overhead 27.90 At standard, each set of covers should require 3.30 yards of material. All of the materials purchased during the month were used in production

Explanation / Answer

Part 1 - Material Price and Quantity Variances

8250 Yards

(3.3 yards * 2500 cover sets)

$7

($45738)/(3.3 yards*1980 cover set)

$5.6

($56000/10000)

Variances

$14000 Favourable

($7 Per yard - $5.6 Pher yard)*10000 Yards

$12250 Unfavourable

(8250 Yards - 10000 Yards)*$7 Per yard

Part 2 - Direct Labour Variances

1250 Hours

(990/1980)*2500

$7

($6930/990)

$9.25

($9250/1000)

Variances

$2250 Unfavourable

($7 Per hours- $9.25 Per hours)*1000 hours

$1750 Favourable

(1250 hours - 1000 hours)*$7 Per hour

Part 3 - Variable overhead Variances

$4.5

($4500/1000)

$3.2

($3168/990)

$5625

Variances

$1300 Favourable

($4.5 - $3.2)*1000 hours

$1125 Favourable

(1250 - 1000)*4.5

Particulars Flexible Budget Actual Budget Material Purchase (In yards)

8250 Yards

(3.3 yards * 2500 cover sets)

10000 yards Rate per yard

$7

($45738)/(3.3 yards*1980 cover set)

$5.6

($56000/10000)

Total Direct Material cost $57750 $56000

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