1. 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 1,045 hours each month to produce 2,090 sets of covers. The standard costs associated with this level of production are:

1. 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 1,045 hours each month to produce 2,090 sets of covers. The standard costs associated with this level of production are: Total Direct materials $ 49,533 Direct labor $ 10,450 Variable manufacturing overhead (based on direct labor-hours) $ 4,598 Per Set of Covers $ 23.70 5.00 2.20 $ 30.90 During August, the factory worked only 800 direct labor-hours and produced 1,900 sets of covers. The following actual costs were recorded during the month: Per Set of Covers Total Direct materials (6,500 yards) Direct labor Variable manufacturing overhead $ 44,460 $ $ 9,880 5.20 $ 4,560 2.40 $ 23.40 31.00 At standard, each set of covers should require 3.00 yards of material. All of the materials purchased during the month were used in production. 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. 2. Highland Company produces a lightweight backpack that is popular with college students. Standard variable costs relating to a single backpack are given below: Direct materials Direct labor Variable manufacturing overhead Total standard cost Standard Quantity or Hours ? ? ? Standard Price or Rate $5.00 per yard ? $2 per direct labor-hour Standard Cost $? ? ? $? Overhead is applied to production on the basis of direct labor-hours. During March, 440 backpacks were manufactured and sold. Selected information relating to the month's production is given below: Total standard cost allowed* Actual costs incurred Materials price variance Materials quantity variance Labor rate variance Labor efficiency variance Variable overhead rate variance Materials Used $9,460 $8,048 ? $ 600 U Direct Labor $6,468 ? Variable Manufacturing Overhead $1,232 $1,641 ? ? Variable overhead efficiency variance ? ? *For the month's production. The following additional information is available for March's production: Actual direct labor-hours Standard overhead rate per direct labor-hour 690 $2.00 Difference between standard and actual cost per backpack produced during March $0.20 F 3. You have recently accepted a position with Vitex, Inc., the manufacturer of a popular consumer product. During your first week on the job, the vice president has been favorably impressed with your work. She has been so impressed, in fact, that yesterday she called you into her office and asked you to attend the executive committee meeting this morning for the purpose of leading a discussion on the variances reported for last period. Anxious to favorably impress the executive committee, you took the variances and supporting data home last night to study. On your way to work this morning, the papers were laying on the seat of your new, red convertible. As you were crossing a bridge on the highway, a sudden gust of wind caught the papers and blew them over the edge of the bridge and into the stream below. You managed to retrieve only one page, which contains the following information: Standard Cost Card * Direct materials, 2.40 pounds at in Process during the period. Applied to Work $17.10 per pound Direct labor, 1.00 direct labor-hours at $15.20 per direct labor-hour Entry obliterated. Variable manufacturing overhead, 1.00 direct labor-hours at $9.20 per direct labor-hour $ $ 41.04 15.20 $ 9.20 Total Variances Reported Standard Cost* You recall that manufacturing overhead cost is applied to production on the basis of direct laborPrice Quantity or hours and that all of the materials purchased during the period were used in production. Work in or Rate Efficiency process materials are insignificant and can be ignored. $12,412 F Direct inventories $697,680 $34,200 U Direct labor Variable manufacturing overhead $258,400 $156,400 $ 3,600 U $ 4,500 F $15,200 U $ ? U It is now 8:30 a.m. The executive committee meeting starts in just one hour; you realize that to avoid looking like a bungling fool you must somehow generate the necessary \"backup\" data for the variances before the meeting begins. Without backup data it will be impossible to lead the discussion or answer any questions. 1. How many units were produced last period? 2. How many pounds of direct material were purchased and used in production? 3. What was the actual cost per pound of material? 4. How many actual direct labor-hours were worked during the period? 5. What was the actual rate paid per direct labor-hour? 6. How much actual variable manufacturing overhead cost was incurred during the period? 4. Lane Company manufactures a single product that requires a great deal of hand labor. Overhead cost is applied on the basis of standard direct labor-hours. Variable manufacturing overhead should be $3.40 per standard direct labor-hour and fixed manufacturing overhead should be $999,000 per year. The company's product requires 4 pounds of material that has a standard cost of $6.50 per pound and 1.5 hours of direct labor time that has a standard rate of $12.70 per hour. The company planned to operate at a denominator activity level of 135,000 direct laborhours and to produce 90,000 units of product during the most recent year. Actual activity and costs for the year were as follows: Number of units produced Actual direct labor-hours worked Actual variable manufacturing overhead cost incurred Actual fixed manufacturing overhead cost incurred 108,000 175,500 $ 368,550 $ 1,053,000 1. Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements. 2. Prepare a standard cost card for the company's product. 3a Compute the standard direct labor-hours allowed for the year's production. . 3b . Complete the following Manufacturing Overhead T-account for the year: 4. Determine the reason for the underapplied or overapplied overhead from (3) above by computing the variable overhead rate and efficiency variances and the fixed overhead budget and volume variances. Question 3: Question 3