Question

# Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat...

 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:

 Total Per Set of Covers Direct materials \$ 37,740 \$ 18.50 Direct labor \$ 9,180 4.50 Variable manufacturing overhead       (based on direct labor-hours) \$ 2,448 1.20 \$ 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:

 Total Per Set of Covers Direct materials (9,100 yards) \$ 52,780 \$ 18.20 Direct labor \$ 13,630 4.70 Variable manufacturing overhead \$ 4,640 1.60 \$ 24.50

 At standard, each set of covers should require 2.50 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. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)

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

 3. Compute the variable overhead rate and efficiency variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)

 Budgted - 2040 units Standered Cost-2900 units Actual Qty Rate Amount Qty Rate Amount Qty Rate Amount Material 5100 7.4 37740 7250 7.4 53650 9100 5.8 52780 Labour 1020 9 9180 1450 9 13050 1000 13.63 13630 Variable OH 1020 2.4 2448 1450 2.4 3480 1000 4.64 4640
 Material Price Variance (SR-AR)AQ Purchase (7.4-5.8)*9100 14560 "F" Material Qty Variance (SQ-AQ)SR (7250-9100)*7.4 -13690 "U" Labour rate Variance (SR-AR)A. Hrs (9-13.63)*1000 -4630 "U" Labour efficiency Variance (Shrs- Ahrs)SR (1450-1000)*9 4050 "F" V OH Rate Variance (SR-AR)A. Hrs (2.4-4.64)*1000 -2240 "U" V OH Effici Variance (Shrs- Ahrs)SR (1450-1000)*2.4 1080 "F"