Question

Marvel parts, incorporated, 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 630 hours each month to produce 2,100 sets of covers. the standard costs associated with this level of production are: total per set of covers direct materials $ 38,640 $ 18.40 direct labor $ 6,300 3.00 variable manufacturing overhead (based on direct labor-hours) $ 3,150 1.50 $ 22.90 during august, the factory worked only 500 direct labor-hours and produced 2,000 sets of covers. the following actual costs were recorded during the month: total per set of covers direct materials (5,000 yards) $ 36,000 $ 18.00 direct labor $ 6,400 3.20 variable manufacturing overhead $ 4,400 2.20 $ 23.40 at standard, each set of covers should require 2.3 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.

Answer 1

To compute the variances for Marvel Parts, Incorporated, one must evaluate the differences between actual and standard costs for materials, labor, and variable overhead, considering price, quantity, rate, and efficiency for each.

Step-by-step explanation:

The calculation of variances for Marvel Parts, Incorporated involves comparing actual costs with standard costs to determine areas of over- or under-spending in the manufacturing process of seat covers. To compute the material price and quantity variances for August, we will use the actual and standard costs of direct materials and quantity produced.

1. Material Price Variance (MPV) = (Actual Price - Standard Price) x Actual Quantity used
2. Material Quantity Variance (MQV) = (Actual Quantity - Standard Quantity) x Standard Price

To compute the labor rate and efficiency variances for August, we consider the actual labor cost against the standard labor cost based on the actual hours worked.

1. Labor Rate Variance (LRV) = (Actual Hourly Rate - Standard Hourly Rate) x Actual Hours
2. Labor Efficiency Variance (LEV) = (Actual Hours - Standard Hours) x Standard Hourly Rate

To find the variable overhead rate and efficiency variances for August, the company's variable manufacturing overhead costs are analyzed in relation to the standard variable overhead costs.

1. Variable Overhead Rate Variance (VORV) = (Actual Overhead Rate - Standard Overhead Rate) x Actual Hours
2. Variable Overhead Efficiency Variance (VOEV) = (Actual Hours - Standard Hours) x Standard Overhead Rate