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PROBLEM 10-9 Comprehensive Variance Analysis LO 10-1, LO10-2, LO10-3 Marvel Parts, Inc., manufactures auto accessories. One of the company's products is a set of seat
PROBLEM 10-9 Comprehensive Variance Analysis LO 10-1, LO10-2, LO10-3 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 uses a standard cost system for all of its products. According to the standards that have been set for the seat covers, the factory should work 2,850 hours each month to produce 1,900 sets of covers. The standard costs associated with this level of production are: Total Per Set of Covers $22.40 27.00 $42,560 $51,300 Direct materials Direct labor Variable manufacturing overhead (based on direct labor-hours) $6,840 3.60 $53.00 During August, the factory worked only 2,800 direct labor-hours and produced 2,000 sets of covers. The following actual costs were recorded during the month: Total Direct materials (12,000 yards) Direct labor Variable manufacturing overhead $45,600 $49,000 $7,000 Per Set of Covers $22.80 24.50 3.50 $50.80 At standard, each set of covers should require 5.6 yards of material. All of the materials purchased during the month were used in production. Required: Compute the following variances for August: 1. The materials price and quantity variances. 2. The labor rate and efficiency variances. 3. The variable overhead rate and efficiency variances
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