Dawson Toys Ltd produces a toy called the Maze The company h

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 $0.32 per micron Direct labor: 1.3 hours per toy at $7.20 per hour During July, the company produced 4,600 Maze toys. Production data for the month on the toy follow Direct materials: 76,000 microns were purchased at a cost of $0.29 per micron. 30,000 of these microns were still in inventory at the end of the month. Direct labor: 6,280 direct labor-hours were worked at a cost of $49,612 Required: 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).) a. The materials price and quantity variances. Material price variance Material quantity variance b. The labor rate and efficiency variances. Labor rate variance Labor efficiency variance

Solution

1.a. Direct Material Price Variance=( Standard Price- Actual price)X Actual Quantity Purchased =($0.32-$0.29)X76000= $2280 Favourable Direct Material Quantity Variance = ( Standard Qty-Actual Quantity)X Standard Price per Unit =((8micronX4600)-36000)X $0.32= $256 Favourrable 1(b) Direct Labour Rate variance= (Standard Rate-Actual Rate)X Actual Hour Worked =($7.2-($49612/6280))X6280= $4396 Unfavourable Direct Labour Efficiency Variance= ( Std. Hour for Actual Production-Actual hour Worked)Standard Rate per Hour =((1.3X4600)-6280)X $7.20= $2160 Unfavourable