problem 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 1,020 hours each month to produce 2,040 sets of covers. The standard costs associated with this level of production are:

TotalPer Set

of CoversDirect materials$37,740$18.50Direct labor$9,1804.50Variable manufacturing overhead (based on direct labor-hours)$2,4481.20$24.20

During August, the factory worked only 1,000 direct labor-hours and produced 2,900 sets of covers. The following actual costs were recorded during the month:

TotalPer Set

of CoversDirect materials (9,100 yards)$52,780$18.20Direct labor$13,6304.70Variable manufacturing overhead$4,6401.60$24.50

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.)

Problem 2

Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materialsX442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis):

Raw MaterialStandard Labor TimeProductX442Y661SinteringFinishingAlpha62.0 kilos1.5 liters0.10 hours0.80 hoursZeta73.0 kilos2.5 liters0.45 hours0.90 hours

Information relating to materials purchased and materials used in production during May follows:

MaterialPurchasesPurchase CostStandard

PriceUsed in

ProductionX44214,800kilos$66,600$4.30per kilo9,300kilosY66115,800liters$23,700$1.60per liter13,800liters

The following additional information is available:

1. The company recognizes price variances when materials are purchased.
2. The standard labor rate is $22.00 per hour in Sintering and $21.00 per hour in Finishing.
3. During May, 1,220 direct labor-hours were worked in Sintering at a total labor cost of $28,060, and 2,930 direct labor-hours were worked in Finishing at a total labor cost of $67,390.
4. Production during May was 2,300 Alpha6s and 1,600 Zeta7s.

Required:

1. Complete thestandard cost card for each product, showing the standard cost of direct materials and direct labor.

2. Compute the materials price and quantity variances for each material.

3. Compute the labor rate and efficiency variances for each operation.

Problem 3

Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May.

Standard Cost per UnitActual Cost per UnitDirect materials:Standard: 1.90 feet at $4.60 per foot$8.74

Actual: 1.85 feet at $5.00 per foot$9.25Direct labor:Standard: 0.95 hours at $19.00 per hour18.05

Actual: 1.00 hours at $18.50 per hour18.50Variable overhead:Standard: 0.95 hours at $7.00 per hour6.65Actual: 1.00 hours at $6.60 per hour6.60Total cost per unit$33.44

$34.35Excess of actual cost over standard cost per unit$0.91

The production superintendent was pleased when he saw this report and commented: "This $0.91 excess cost is well within the 4 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product."

Actual production for the month was 19,000 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials.

Required:

1. Compute the following variances for May:

a. Materials price and quantity variances.

b. Labor rate and efficiency variances.

c. Variable overhead rate and efficiency variances.

2. How much of the $0.91 excess unit cost is traceable to each of the variances computed in (1) above.

3. How much of the $0.91 excess unit cost is traceable to apparent inefficient use of labor time?