Question

Problem 10-9 (Algo) Comprehensive Variance Analysis [LO10-1, 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 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 1,055 hours each month to produce 2,110 sets of covers. The standard costs associated with this level of production are:

	Total		Per Set of Covers
Direct materials	$	51,273	$	24.30
Direct labor	$	10,550		5.00
Variable manufacturing overhead (based on direct labor-hours)	$	4,853		2.30
			$	31.60

During August, the factory worked only 1,000 direct labor-hours and produced 2,100 sets of covers. The following actual costs were recorded during the month:

	Total		Per Set of Covers
Direct materials (6,800 yards)	$	49,980	$	23.80
Direct labor	$	10,920		5.20
Variable manufacturing overhead	$	5,460		2.60
			$	31.60

At standard, each set of covers should require 3.0 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.

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

The favorable and unfavorable are correct. The numbers are not.

Answer 1

5100F 4050 U Answer Mateial Price Variance (AQ*AP)-(AQ*SP) Matrial Quanity Varaince (AQ*SP)-(SQ*SP) Labor rate Variance (AH*AR)-(AH*SR) labor Efficiency Varaince (AH*SR)-(SH*SR) Variable Overhead Rate Variance (AH*AR)-(AH*SR) Variable Overhead Efficiency Varaince (AH*SR)-(SH*SR) 920 U 500 F 860 U 230 F

8.10 Per Yard 3 Yards 6300 Yards 2100 Units 6800 Yards 6800 Yards 7.35 Per Yard Direct Material Standard Price (24.30/3) SP Standard quantity Per unit Standard Quantity for Actual Output Actual Output Actual Quantity Purchased AQP Actual Quanity Used AQ Actual Price of Material(49980/6800) | AP Direct Labor Standard Rate(10550/1055) SR Standard hours per unit (1055/2110) Standard Hours for Actual output Actual Output Actual hours Worked AH Actual Rate (10920/1000) AR Varaible OH Standard Rate(4853/1055) SR Standard hours per unit (1055/2110) Standard Hours for Actual output Actual Output Actual hours Worked AH Actula Rate =(4853/1000) SH 10 Per hour 0.5 hours 1050 Hours 2100 Units 1000 hours 10.92 Per hour SH 4.60 Per hour 0.50 hours 1050 Hours 2100 Units 1000 hours 5.46 Per hour AR