Can someone please help with the B, I cannot figure it out. Dawson Toys, Ltd., p
ID: 2580167 • Letter: C
Question
Can someone please help with the B, I cannot figure it out.
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: 6 microns per toy at $0.32 per micron
Direct labor: 1.4 hours per toy at $6.50 per hour
During July, the company produced 4,500 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. 40,250 of these microns were still in inventory at the end of the month.
Direct labor: 6,700 direct labor-hours were worked at a cost of $46,230.
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). Do not round intermediate calculations. Round final answer to the nearest whole dollar.)
a.
The materials price and quantity variances.
Material price variance $2220 (F)
Material price quantity variance $2,160 (U)
b.
The labor rate and efficiency variances.
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
Solution of Part B :-
Standerd Hours = (4500*1.4) = 6300 Hours
Actual hours = 6700 hours
Standerd Rate = $6.5 per hour
Actual Rate = $46230 / 6700 = $6.9 per hour
Labor Rate Variance = Actual hours* (Standerd rate - Actual Rate)
= 6700 H * ($6.5 - $6.9)
= $2680 Unfavorable
Labor Efficiency Variance = Standerd Rate * (Actual Hours - Standerd Hours)
= $6.5 per hour * (6700 H - 6300 H)
= $2600 Unfavorable