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: 7 microns per toy at $0.30 per micron Direct labor: 1.1 hours per toy at $6.60 per hour During July, the company produced 4,900 Maze toys. The toy\'s production data for the month are as follows Direct materials. 72,000 microns were purchased at a cost of $0.28 per micron. 29,125 of these microns were still in inventory at the end of the month. Direct labor. 5,790 direct labor-hours were worked at a cost of $39,951. 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. Do not round intermediate calculations. Round final answer to the nearest whole dollar 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

Solution

Answers

Actual DATA for

4900

units

Quantity (AQ)

Rate (AR)

Actual Cost

[A}

[B]

[A x B]

Direct Material

42875 [72,000 – 29,125]

$              0.28

$           12,005.00

Direct labor

5790

$                6.90

$           39,951.00

Standard DATA for

4900

units

Quantity (SQ)

Rate (SR)

Standard Cost

Direct Material

34,300 [4,900 toys x 7]

$                0.30

$           10,290.00

Direct labor

5390 [4,900 toys x 1.1 hours]

$                6.60

$           35,574.00

Material Price Variance

(

Standard Rate

-

Actual Rate

)

x

Actual Quantity

(

$                        0.30

-

$                       0.28

)

x

42875

857.5

Variance

$                  857.50

Favourable-F

Material Quantity Variance

(

Standard Quantity

-

Actual Quantity

)

x

Standard Rate

(

34300

-

42875

)

x

$                           0.30

-2572.5

Variance

$              2,572.50

Unfavourable-U

Labor Rate Variance

(

Standard Rate

-

Actual Rate

)

x

Actual Labor Hours

(

$                        6.60

-

$                       6.90

)

x

5790

-1737

Variance

$              1,737.00

Unfavourable-U

Labour Efficiency Variance

(

Standard Hours

-

Actual Hours

)

x

Standard Rate

(

5390

-

5790

)

x

$                           6.60

-2640

Variance

$              2,640.00

Unfavourable-U

Actual DATA for	4900	units
	Quantity (AQ)	Rate (AR)	Actual Cost
	[A}	[B]	[A x B]
Direct Material	42875 [72,000 – 29,125]	$              0.28	$           12,005.00
Direct labor	5790	$                6.90	$           39,951.00
Standard DATA for	4900	units
	Quantity (SQ)	Rate (SR)	Standard Cost
Direct Material	34,300 [4,900 toys x 7]	$                0.30	$           10,290.00
Direct labor	5390 [4,900 toys x 1.1 hours]	$                6.60	$           35,574.00