Marvel Parts, Inc., manufactures auto accessories. One of the companys products is a set of...
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Marvel Parts, Inc., manufactures auto accessories. One of the companys 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 1,015 hours each month to produce 2,030 sets of covers. The standard costs associated with this level of production are:
Per Set of Covers Direct materials Direct labor Variable manufacturing overhead (based on direct labor-hours) Total $ 8,120 $ 3,857 $59,276 $29.20 4.00 1.90 $35.10 During August, the factory worked only 700 direct labor-hours and produced 1,500 sets of covers. The following actual costs were recorded during the month Per Set Total of Covers Direct materials (8,400 yards) Direct labor Variable manufacturing overhead $42,000 $28.00 4.20 2.10 $34.30 $ 6,300 $ 3,150
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