newconnect.mheducation.com Illinois State University THE 154 001 SP2018- Introdu
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newconnect.mheducation.com Illinois State University THE 154 001 SP2018- Introduction To Black Dra Accounting Huron Company produces a commercial cleaning c known CH 10 HW 6 Saved Help Save & Exit Submit Check my work 8 Exercise 10-8 Direct Materials and Direct Labor Variances [LO10-1, LO10-2] 9 points 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: 6 microns per toy at $1.50 per micron Direct labor: 1.3 hours per toy at $21 per hour eBook Print During July, the company produced 3,000 Maze toys. The toy's production data for the month are as follows: Direct materials. 25,000 microns were purchased at a cost of $1.48 per micron. 5,000 of these microns were still in inventory at the end of the month. Direct labor. 4,000 direct labor-hours were worked at a cost of $88,000. Required 1. Compute the following variances for July: (Indicate the effect of each variance by selecting "FI" for favorable, "U" for unfavorable and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) a. The materials price and quantity variances. b. The labor rate and efficiency variances. a. Material price variance Material quantity variance Labor rate variance Labor efficiency variance 1b. Mc Graw Hill 8 of 8 Next> ? PrevExplanation / Answer
Answer of Part 1a:
Material Price Variance = Actual Quantity * (Actual Price – Standard Price)
Material Price Variance = 25,000 * ($1.48 per microns - $1.50 per micron)
Material Price Variance = $500 Favourable
Materials Quantity Variance = Standard Price * (Actual Quantity – Standard Quantity)
Material Quantity Variance = $1.50 per micron (20,000 – 3,000 *6)
Material Quantity Variance = $1.50 per micron * 2,000
Material Quantity Variance = $3,000 Unfavourable
Answer of Part 1b:
Actual Rate = $88,000 / 4,000
Actual Rate = $22
Standard Hours = 3,000 *6
Standard Hours = 18,000
Labor Rate Variance = Actual Hours * (Actual Rate – Standard Rate)
Labor Rate Variance = 4,000 * ($22 - $21)
Labor Rate Variance = 4,000 * $1
Labor Rate Variance = $4,000 Unfavourable
Labor Efficiency Variance = Standard Rate * (Actual Hours – Standard Hours)
Labor Efficiency Variance =$21 * (4,000 – 18,000)
Labor Efficiency Variance = $294,000 Favourable
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