Dawson Toys, Ltd., produces a toy called the Maze. The company has recently esta

Question

Dawson Toys, Ltd., produces a toy called 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:

Compute the following variances for July: (Do not round intermediate calculations. Round final answer to the nearest whole dollar. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

a.The materials price and quantity variances.

Dawson Toys, Ltd., produces a toy called 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:

Explanation / Answer

Answer:

a. The Material Price Variance = Actual Quantity x Actual Price - Actual Quantity x Budgeted Price = 42,000 x $ 0.28 - 42,000 x $ 0.31 = $ 11,760 - $ 13,020 = - $ 1260 Favourable Variance

The Material Quantity Variance = Actual Quantity x Budgeted Price - Budgeted Quantity x Budgeted Price = 42,000 x $ 0.31 - 7 x 4800 x $ 0.31 = $ 13,020 - $ 10,416 = $ 2,604 Unfavourable

b. The Labour Rate Variance = Actual Quantity x Actual Rate - Actual Quantity x Standard Rate = $ 49,842 - 1.4 x 4800 x $ 6.60 = $ 49,842 - $ 44,352 = $ 5,490 Unfavorable

The Labour Efficieny Variance = Actual Hours x Standard Rate - Standard Hours x Standard Rate = 7020 x $ 6.60 - 1.4 x 4800 x $ 6.6 = $ 46,332 - $ 44,352 = $ 1,980 Unfavourable.

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