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: 7 microns per toy at $0.32 per micron

Direct labor: 1.1 hours per toy at $6.80 per hour

During July, the company produced 4,600 Maze toys. Production data for the month on the toy follow:

Direct materials: 73,000 microns were purchased at a cost of $0.29 per micron. 32,750 of these microns were still in inventory at the end of the month.

Direct labor: 5,460 direct labor-hours were worked at a cost of $40,404.

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 "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

a.	The materials price and quantity variances.

         

b.	The labor rate and efficiency variances.

Answer 1

Standard Cost Sheet PU					A	Material Price Variance:
Component	Qty	Rate	Price			(Standard Price-Actual Price)Actual Qty Consumed
Direct Material	7	0.32	2.24			(0.32-0.29)*40250
Direct Labor	1.1	6.80	7.48			1207.5	F
			9.72		A1	Material Usage Variance:
						(Standard Qty-Actual Qty consumed)Standard Price
Actual Cost						(32200-40250)*0.32
Component	Qty	Rate	Price			-2576	UF
Direct Material	40250	0.29	11673		B	Labor Price Variance:
Direct Labor	5460	7.40	40404			(Standard Price-Actual Price)Actual Hours
Total			52077			(6.80-7.40)*5460
						-3276	UF
Revised Standard Cost for Actuals (4600)					B1	Labor Eff Variance:
Component	Qty	Rate	Price			(Standard Hours-Actual Hours)Standard Price
Direct Material	32200	0.32	10304			(5060-5460)*6.80
Direct Labor	5060	6.80	34408			-2720	UF
Total			44712
Material Purchases	73000
Less: Closing Stock	32750
Net Consumed	40250