Chapter 8 Homework Question 8 (of 9) 8. 1.00 points Dawson Toys, Ltd, produces a

Question

Chapter 8 Homework Question 8 (of 9) 8. 1.00 points Dawson Toys, Ltd, produces a toy called the Maze. The company has recenty 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 $0.31 per micron Direct labor: 1.3 hours per toy at $7 20 per hour During July, the company produced 5,300 Maze toys. Production data for the month on the toy follow Direct materials: 74,000 microns were purchased at a cost of $0.29 per micron. 27,825 of these microns were still in inventory at the end of the month Direct labor: 7,490 direct labor-hours were worked ata cost of $56,824. Required: 1. 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 "" 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

Explanation / Answer

a) Material price variance = (0.31-0.29)*74000 = 1480 F

Material quantity variance = (5300*7-46375)*0.31 = 2875 U

b) Labour rate variance = (7.2*7490-56924) = 2996 U

Labour efficiency variance = (5300*1.3-7490)*7.2 = 4320 U

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