Chapter 10 Question 1

Marvel Parts. Inc.. manufactures auto accessories. One of the company's products is a set of seat covers that can be adjusted to t 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 1,075 hours each month to produce 2.150 sets of covers. The standard costs associated with this level of production are: Per Set: Total of Cmrs Direct materials $54,325 $25.50 Direct labor $10,?50 5.00 Variable manufacturing overhead [based on direct labor-hours] 5 5,335 2.50 $33.00 During August. the factory worked only 800 direct labor-hours and produced 2,500 sets of covers. The following actual costs were recorded during the month: For Set Total of Cuvnrs Direct materials [12,500 yards} $50,?50 $23.50 Direct labor $13,000 5.20 Variable manufacturing overhead 5 7,000 2.00 $31.50 At standard, each set of covers should require 3.0 yards of material. All of the materials purchased during the month were used in production