Dawson Toys, Ltd., produces a toy caled the Maze. The company has recently estab

Question

Dawson Toys, Ltd., produces a toy caled the Maze. The company has recently established a standard cost system to help control costs and has established the following standards for the Maze toy: Direct materials: 7 microns per toy at $0.31 per micron Direct labor: 1.1 hours per toy at $7.10 per hour During July, the company produced 5,500 Maze toys. Production data for the month on the toy follow: Direct materials: 77,000 microns were purchased at a cost of $0.29 per micron. 28,875 of these microns were still in inventory at the end of the month Direct labor: 6,450 direct labor-hours were worked at a cost of $49,020 Required: 1. Compute the following variances for July: (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None for no effect (i.e., zero variance). Do not round intermediate calculations. Round final answer to the nearest whole dollar.) a. The materials price and quantity variances. Material price variance Material quantity variance b. The labor rate and efficiency variances. Labor rate variance Labor efficiency variance

Explanation / Answer

a Material price variance = 77000*(0.29-0.31)= $1540 F Material quantity variance = 0.31*(48125-5500*7)= $2984 U b Labor rate variance = 49020-(6450*7.1)= $3225 U Labor efficiency variance = 7.1*(6450-5500*1.1)= $2840 U

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