Southwest Auto Parts has a seat manufacturing department that uses activity-based costing for which the following information is available.Activity Allocation BaseCost Allocation RatePurchasing# of Purchase Orders $50 per Purchase OrderAssembling# of Parts $.50 per PartPackaging# of Finished Seats $1 per Finished SeatEach auto seat has 20 parts. Direct materials cost per seat is $11. Southwest has just been asked to bid on 50,000 seats that would be used on the Lexus RX300. Southwest will use a total of 200 purchase orders if Lexus accepts its bid.1.In good order and form, compute the total cost that Southwest will incur to produce the number seats required by the bid.2.Compute the average cost per seat.3.Suppose that instead of an ABC system, Southwest had a traditional product costing system that allocates all costs other than direct materials at the rate of $65 per direct labor hour. The seat order will require 10,000 direct labor hours. What price will Southwest bid using this system
Southwest Auto Parts has a seat manufacturing department that uses activity-based costing for which the following information is available.Activity Allocation BaseCost Allocation RatePurchasing# of Purchase Orders $50 per Purchase OrderAssembling# of Parts $.50 per PartPackaging# of Finished Seats $1 per Finished SeatEach auto seat has 20 parts. Direct materials cost per seat is $11. Southwest has just been asked to bid on 50,000 seats that would be used on the Lexus RX300. Southwest will use a total of 200 purchase orders if Lexus accepts its bid.1.In good order and form, compute the total cost that Southwest will incur to produce the number seats required by the bid.2.Compute the average cost per seat.3.Suppose that instead of an ABC system, Southwest had a traditional product costing system that allocates all costs other than direct materials at the rate of $65 per direct labor hour. The seat order will require 10,000 direct labor hours. What price will Southwest bid using this system
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Marvel Parts, Inc., manufactures auto accessories. One of thecompanyâs products is a set of seat covers that can be adjusted tofit nearly any small car. The company has a standard cost system inuse for all of its products. According to the standards that havebeen set for the seat covers, the factory should work 995 hourseach month to produce 1,990 sets of covers. The standard costsassociated with this level of production are:
| Total | PerSet of Covers | ||||
| Directmaterials | $ | 47,362 | $ | 23.80 | |
| Direct labor | $ | 8,955 | 4.50 | ||
| Variable manufacturingoverhead (based on direct labor-hours) | $ | 2,388 | 1.20 | ||
| $ | 29.50 | ||||
During August, the factory worked only 1,000 direct labor-hoursand produced 2,300 sets of covers. The following actual costs wererecorded during the month:
| Total | PerSet of Covers | ||||
| Direct materials(8,800 yards) | $ | 50,600 | $ | 22.00 | |
| Direct labor | $ | 10,580 | 4.60 | ||
| Variable manufacturingoverhead | $ | 4,600 | 2.00 | ||
| $ | 28.60 | ||||
At standard, each set of covers should require 3.50 yards ofmaterial. All of the materials purchased during the month were usedin production.
Required
1. Compute the materials price and quantity variances forAugust.
2. Compute the labor rate and efficiency variances forAugust.
3. Compute the variable overhead rate and efficiency variancesfor August.
