Dawson Toys, Ltd., produces a toy called the Maze. The company has recently esta
ID: 2570235 • Letter: D
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: 6 microns per toy at $1.50 per micron
Direct labor: 1.3 hours per toy at $21 per hour
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 "F" 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.
1a. Material price variance Material quantity variance 1b. Labor rate variance Labor efficiency varianceExplanation / Answer
Standard Actual Particulars Qty/ hours Rate amount Qty/ hours Rate amount Materials 18,000.00 1.50 27,000.00 25,000.00 1.48 37,000.00 Labour 3,900.00 21.0000 81,900.00 4,000.00 22.00 88,000.00 Actual output 3,000.00 Materials reqd (3000*6) 18,000.00 Labour hrs reqd (3000*1.3) 3,900.00 DMPV = (SP-AP)*AQ purchased DMPV = (1.50 - 1.48)25000 DMPV = 500 F DMQV= (SQ-AQ)SP DMQV= (18000 - 20000)1.50 DMQV= 3000 U DLRV= (SR-AR)AH DLRV= (21 - 22)4000 DLRV= 4000 U DLEV = (SH-AH)SR DLEV = (3900 - 4000)21 DLEV = 2100 U
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