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 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.
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 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.
Related questions
Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system:
| Inputs | (1) Standard Quantity or Hours | (2) Standard Price or Rate | Standard Cost (1) Ã (2) | ||||
| Direct materials | 6 | pounds | $ | 3 | per pound | $ | 18.00 |
| Direct labor | 0.8 | hours | $ | 15 | per hour | $ | 12.00 |
| Variable manufacturing overhead | 0.8 | hours | $ | 3 | per hour | $ | 2.40 |
| Total standard cost per unit | $ | 32.40 | |||||
| Total | Variances Reported | |||||||
| Standard Cost* | Price or Rate | Quantity or Efficiency | ||||||
| Direct materials | $ | 405,000 | $ | 6,900 | F | $ | 9,000 | U |
| Direct labor | $ | 270,000 | $ | 14,550 | U | $ | 21,000 | U |
| Variable manufacturing overhead | $ | 54,000 | $ | 1,300 | F | $ | ? | U |
*Applied to Work in Process during the period.
The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored.
Required:
1. How many units were produced last period?
2. How many pounds of direct material were purchased and used in production?
3. What was the actual cost per pound of material? (Round your answer to 2 decimal places.)
4. How many actual direct labor-hours were worked during the period?
5. What was the actual rate paid per direct labor-hour? (Round your answer to 2 decimal places.)
6. How much actual variable manufacturing overhead cost was incurred during the period?
Reference links
Using Standard CostsâDirect Labor Variancesopens in a new window
Using Standard CostsâDirect Materials Variances
Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system:
| Inputs | (1) Standard Quantity or Hours | (2) Standard Price or Rate | Standard Cost (1) Ã (2) | ||||
| Direct materials | 2.10 | pounds | $ | 16.90 | per pound | $ | 35.49 |
| Direct labor | 1.00 | hours | $ | 15.90 | per hour | $ | 15.90 |
| Variable manufacturing overhead | 1.00 | hours | $ | 9.50 | per hour | $ | 9.50 |
| Total standard cost per unit | $ | 60.89 | |||||
| Total | Variances Reported | |||||||
| Standard Cost* | Price or Rate | Quantity or Efficiency | ||||||
| Direct materials | $ | 638,820 | $ | 11,542 | F | $ | 33,800 | U |
| Direct labor | $ | 286,200 | $ | 3,800 | U | $ | 15,900 | U |
| Variable manufacturing overhead | $ | 171,000 | $ | 4,000 | F | $ | ?â | U |
*Applied to Work in Process during the period.
The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored.
Required:
1. How many units were produced last period?
2. How many pounds of direct material were purchased and used in production?
3. What was the actual cost per pound of material? (Round your answer to 2 decimal places.)
4. How many actual direct labor-hours were worked during the period?
5. What was the actual rate paid per direct labor-hour? (Round your answer to 2 decimal places.)
6. How much actual variable manufacturing overhead cost was incurred during the period?
Helix Company produces several products in itsfactory, including a karate robe. The company uses a standard costsystem to assist in the control of costs. According to thestandards that have been set for the robes, the factory should work780 direct labor-hours each month and produce 2,600 robes. Thestandard costs associated with this level of production are asfollows:
| Total | Per Unit of Product | ||
| Direct materials | $ | 49,920 | $19.20 |
| Direct labor | $ | 8,060 | 3.10 |
Variable manufacturing overhead | $ | 2,340 | 0.90 |
$ 23.20 | |||
| | |||
During April, thefactory worked only 760 direct labor-hours and produced 2,700robes. The following actual costs were recorded during themonth: |
| Total | Per Unit of Product | ||
| Direct materials (8,370 yards) | $ | 50,220 | $18.60 |
| Direct labor | $ | 8,910 | 3.30 |
Variable manufacturing overhead | $ | 5,670 | 2.10 |
| $ 24.00 | |||
| | |||
At standard, each robe should require 3.0 yardsof material. All of the materials purchased during the month wereused in production. |
| Required: | |
| 1. | Compute the materials price and quantityvariances for April: (Input all amounts as positivevalues. Leave no cells blank - be certain to enter "0" whereverrequired. Indicate the effect of each variance by selecting "F" forfavorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance). Round your intermediate calculations to 2 decimalplaces and final answers to the nearest dollar amount.) |
| Materials price variance | $ | |
| Materials quantity variance | $ | |
| 2. | Compute the labor rate and efficiency variancesfor April: (Inputall amounts as positive values. Leave no cells blank - be certainto enter "0" wherever required. Indicate the effect of eachvariance by selecting "F" for favorable, "U" for unfavorable, and"None" for no effect (i.e., zero variance). Do not round yourintermediate calculations. Round your final answers to the nearestdollar.) |
| Labor rate variance | $ | |
| Labor efficiency variance | $ | |
| 3. | Compute the variable manufacturing overhead rateand efficiency variances for April: (Input all amounts as positivevalues. Leave no cells blank - be certain to enter "0" whereverrequired. Indicate the effect of each variance by selecting "F" forfavorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance). Round your intermediate calculations to 2 decimalplaces and final answers to the nearest dollar amount.) |
| Variable overhead rate variance | $ | |
| Variable overhead efficiency variance | $ | |
