PROBLEM $10-26$

Comprehensive Variance Analysis

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 $2,850$ hours each month to produce $1,900$ sets of covers. The

standard costs associated with this level of production are as follows:

During August, the factory worked only $2,800$ direct labour$-$hours and produced $2,000$ sets of

covers. The following actual costs were recorded during the month:

At standard, each set of covers should require $5\mathrm{.}6$ metres of material. All of the materials

purchased during the month were used in production.

Required:

Compute the following variances for August:

The materials price and quantity variances.

The labour rate and efficiency variances.

The variable overhead spending and efficiency variances.