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

a.

b.

Material Price variance = Actual Quantity purchased* (Actual Price - Standard Price) Material Price variance = 71,000 * ($0.29 - $0.31) Material Price variance = $1,420 F Material Quantity variance = Standard Price * (Actual Quantity used - Standard Quantity) Material Quantity variance = $0.31 * (28,125 - (4,900*7)) Material Quantity variance = $1,914 F

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