Dawson Toys, Ltd., produces a toy called the Maze. The company has recently esta

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:

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). Do not round intermediate calculations. Round final answer to the nearest whole dollar.)

The materials price and quantity variances.

-Material Price Variance $2,340 Favorable

-Material Quantity Variance

-Labor rate variance

-labor efficiency 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

Dawson Toys Ltd. standard per Toy Direct Material 8 microns per toy at $.34 per micron Direct Labour 1.3 hour per toy at $6.50 Per hour Actual performance data Actual Toys manufactured 4800 Maze Toys Microns Purchased 78000 Purchase price per microns $            0.31 Direct manufacturing labour cost $ 48,564.00 Actual Labour hour 6840 Labour price per hour=($48564/6840) $            7.10 Actual Quanity of raw material used=(Quantity Purchased -Ending Inventory)=(78000-30000) 48000 a) Material Price variance=AQ(AP-SP) 78000($.31-$.34) $ (2,340.00) Favourable Material Quantity Variance SQ=standard micron required per toy*Actual toy Manufactured=(8*4800) 38400 SP(AQ-SQ) $.34(48000-38400) $    3,264.00 Unfavourable b) Direct Labour rate Variance AH(AR-SR) 6840($7.10-$6.50) $    4,104.00 Unfavourable Direct Labour Efficiency Variance SR(AH-SH) SH=(Actual quanity of toy manufactured * Labor hours required per toy manufactured)=(4800*1.3) 6240 AH 6840 SR= $            6.50 Direct Labor Efficiency variance=6.5*(6840-6240) $    3,900.00 Unfavourable

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