Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Marvel Parts, Inc., manufactures auto accessories. One of the companys products is a set of seat covers that can be adjusted to fit nearly any

Marvel Parts, Inc., manufactures auto accessories. One of the companys 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 1,030 hours each month to produce 2,060 sets of covers. The standard costs associated with this level of production are:

Total Per Set of Covers
Direct materials $ 39,140 $ 19.00
Direct labor $ 9,270 4.50
Variable manufacturing overhead (based on direct labor-hours) $ 3,502 1.70
$ 25.20

During August, the factory worked only 640 direct labor-hours and produced 1,600 sets of covers. The following actual costs were recorded during the month:

Total Per Set of Covers
Direct materials (5,500 yards) $ 29,920 $ 18.70
Direct labor $ 7,520 4.70
Variable manufacturing overhead $ 4,000 2.50
$ 25.90

At standard, each set of covers should require 2.5 yards of material. All of the materials purchased during the month were used in production.

Required:

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.

(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Erie Company manufactures a mobile fitness device called the Jogging Mate. The company uses standards to control its costs. The labor standards that have been set for one Jogging Mate are as follows:

Standard Hours Standard Rate per Hour Standard Cost
27 minutes $5.60 $2.52

During August, 9,545 hours of direct labor time were needed to make 19,900 units of the Jogging Mate. The direct labor cost totaled $52,498 for the month.

Required:

1. What is the standard labor-hours allowed (SH) to makes 19,900 Jogging Mates?

2. What is the standard labor cost allowed (SH SR) to make 19,900 Jogging Mates?

3. What is the labor spending variance?

4. What is the labor rate variance and the labor efficiency variance?

5. The budgeted variable manufacturing overhead rate is $4.70 per direct labor-hour. During August, the company incurred $49,634 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month.

(For requirements 3 through 5, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Nmap 6 Network Exploration And Security Auditing Cookbook

Authors: Calderon Pale Paulino

1st Edition

1849517487, 978-1849517485

More Books

Students also viewed these Accounting questions

Question

4. Describe three kinds of personality units that are not traits.

Answered: 1 week ago

Question

Which form of proof do you find least persuasive? Why?

Answered: 1 week ago