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

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 Direct materials: 8 microns per toy at s0.33 per micron labor 1.1 hours per toy at $7 30 per hour During July, the company produced 5,500 Maze toys. Production data for the month on the toy follow 19,000 of these microns Direct materials: 74,000 microns were purchased at a cost of $0.31 per micron were still in inventory at the end of the month. Direct labor 6,650 direct labor-hours were worked at a cost of $52,535 Required: 1. Compute the following variances for July. (Indicate the ettect of each variance by selecting "Fw for favorable, "U" for unfavorable, and None" for no etfect (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 quanuity variance 1.48 b The labor rate and efticiency variances Labor rate vanance S 3,700 Labor emficiency variance Type here to search

Explanation / Answer

Material: Std Quantity allowed per unit of output: 8 micron Actual output; 5500 units Std Qty allowed (5500*8): 44000 micron Std price per micron: $ 0.33 per micron Actual Qty purchased: 74000 microns Actual Qty consumed: 55000 microns Actual price per micron; $ 0.31 per micron Material Price variance: Actual Qty purchased (Std price-Actual pricec) 74000 (0.33-0.31) = $1480 F Material Qty variance: Std price (Std Qty-Actual Qty) 0.33 ( 44000 -55000) = $3630 U Labour: Std hours per unit of output: 1.1 hour Std labour hours for actual output (5500*1.1): 6050 hours Std rate per hour: $7.30 per hour Actual labour hours : 6650 hours Actual Rate per hour: (52535/6650): $7.90 Labour Rate variance: Actual hours (Std rate-Actual rate) 6650 (7.30-7.90)= $3990 U Labour efficiency Variance= Std rate (STd hours-Actual Hours) 7.30 (6050-6650)= $4380 U

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