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

Direct materials price variance (Actual price - standard price)* Actual qty purchased (.28 - .30)*71000 1420 F Direct materials Quantity variance (actual qty used - standard qty allowed)*standard price (47,250 - 5400*7))*.30 2835 U labor rate variance (Actual rate - standard rate)*actual hours (8.2 - 7.5)*7,620 5,334 U labor rate efficiecny variance (actual hrs - standars hrs allowed)*standard rate (7620 - 5400*1.3)*7.5 4,500 U

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