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Marvel Parts, Inc., makes seat covers for small cars. The company uses a standard cost system to help control its costs. According to the standards
Marvel Parts, Inc., makes seat covers for small cars. The company uses a standard cost system to help control its costs. According to the standards that have been set for the seat covers, the factory should work 2,400 direct labor hours each month to produce 1,600 seat covers. The standard costs associated with this level of production are :
Total | Per Set of Covers | |
Direct materials | $42,080 | $26.30 |
Direct labor | $43,200 | $ 27.00 |
During April, the factory worked 3,050 direct labor hours and produced 1,750 seat covers. The actual direct labor costs incurred for April were $53,550.
Required:
- What is the standard quantity of total labor hours Marvel should use at the 1,750 seat cover level?
- What is the standard rate for each hour of direct labor?
- What is the total impact on profit due to the actual rate paid for direct labor per hour being different than the rate that was used in the budget? If it decreases profit, please put a negative (-) sign in front of your answer.
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