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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
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 1,015 hours each month to produce 2,030 sets of covers. The standard costs associated with this level of production are Per Set Total of Covers Direct materials Direct labor Variable manufacturing overhead (based on $ 59,276 $29.20 $ 8,120 4.00 1.90 35.19 direct labor-hours) $ 3,857 During August, the factory worked only 700 direct labor-hours and produced 1,500 sets of covers. The following actual costs were recorded during the month: Per Set Total of Covers Direct materials (8,400 yards) Direct labor Variable manufacturing overhead $ 42,000 28.00 $ 6,300 4.20 2.10 $34.30 $ 3,150 At standard, each set of covers should require 4.0 yards of material. All of the materials purchased during the month were used in production
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