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

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: 8 microns per toy at $0.31 per micron Direct labor: 1.3 hours per toy at $6.80 per hour During July, the company produced 4,900 Maze toys. The toy's production data for the month are as follows: Direct materials 75.000 microns were purchased at a cost of $0.29 per micron. 26,000 of these microns were still in inventory at the end of the month. Direct labor 6,870 direct labor-hours were worked at a cost of $50,838. Required: 1. Compute the following variances for July: (Indlicate the effect of each variance by selecting "F" orvorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermecliate calculations. Round final answer to the nearest whole coller amount.) 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 variance

Explanation / Answer

1a. Material price variance = (Standard price - Actual price) x Material purchased
= ($0.31 - $0.29) x 75,000 = $15,000 Favorable

Material quantity variance = (Standard quantity - Actual quantity consumed) x Standard price
= ( 4,900 x 8 - 49,000) x $0.31 = $3,038 Unfavorable

1b. Labor rate variance = (Standard rate - Actual rate) x Actual Hours
= ($6.80 - $50,838 / 6,870) x 6,870 = $4,122 Unfavorable

  Labor efficiency variance = (Standard Hours - Actual Hours) x Standard rate
= ( 4,900 x 1.3 - 6,870) x $6.80 = $3,400 Unfavorable

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