Exercise 8-17 Direct Materials and Direct Labor Variances [LO8-4, LO8-5] Dawson

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:

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).)

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

SQ 36800 4600*8 SP 0.33 AQ 46000 78000-32000 AP 0.3 Material Price Variance AQ*(SP-AP) 46000*(0.33-0.3) 46000*(0.03) 1380 Favourable Material Quantity Variance SP*(SQ -AQ) 0.33*(36800-46000) 0.33*(-9200) 3036 Unfavourable SH 5980 4600*1.30 SR 6.6 AH 6480 AR 7.2 46656/6480 Labour Rate Variance AH*(SR-AR) 6480*(6.6-7.2) 6480*(-0.6) 3888 unfavourable Labour Efficiency Variance SR*(SH-AH) 6.6*(5980-6480) 6.6*(-500) 3300 Unfavourable

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