Exercise 8-17 Direct Materials and Direct Labor Variances [LO8-4, LO8-5] Dawson
ID: 2513123 • Letter: E
Question
Exercise 8-17 Direct Materials and Direct Labor Variances [LO8-4, LO8-5] 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: Direct materials: 7 microns per toy at $0.33 per micron Direct labor: 1.4 hours per toy at $6.90 per hour During July, the company produced 5,000 Maze toys. Production data for the month on the toy follow Direct materials: 74,000 microns were purchased at a cost of $0.31 per micron. 30,250 of these microns were still in inventory at the end of the month. Direct labor: 7,500 direct labor-hours were worked at a cost of $55,500 Required: 1. 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. Material price variance Material quantity variance b. The labor rate and efficiency variances. Labor rate variance Labor efficiency varianceExplanation / Answer
Standard Actual Particulars Qty/ hours Rate amount Qty/ hours Rate amount Materials 35,000.00 0.33 11,550.00 74,000.00 0.31 22,940.00 Labour 7,000.00 6.9000 48,300.00 7,500.00 7.40 55,500.00 Actual Quantity used = 74000 - 30250 43,750.00 Actual output 5,000.00 Materials reqd (5000*7) 35,000.00 Labour hrs reqd (5000*1.4) 7,000.00 DMPV = (SP-AP)*AQ purchased DMPV = (.33 - .31)74000 DMPV = 1480 F DMQV= (SQ-AQ)SP DMQV= (35000 - 43750).33 DMQV= 2887.50 U DLRV= (SR-AR)AH DLRV= (6.90 - 7.40)7500 DLRV= 3750 U DLEV = (SH-AH)SR DLEV = (7000 - 7500)6.90 DLEV = 3,450 U
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.