awson Toys, Ltd., produces a toy called the Maze. The company has recently estab

Question

awson Toys, Ltd., produces a toy called the Maze. The company has recently established a standard cost system to help control sts and has established the following standards tor the Maze toy irect materials: 6 microns per toy at $0.33 per micron Direct labor: 1.4 hours per toy at $6.80 per hour During July, the company produced 5,400 Maze toys. The toy's production data for the month are as follows:; Direct materials 71,000 microns were purchased at a cost of $0.30 per micron. 30,500 of these microns were still in inventory at the end of the month Direct labor. 7,96 direct labor-hours were worked at a cost of $58,904 Required: 1. Compute the following variarces for July (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, 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. ta. Material price ariance Material quanty variance 1b. Labor rate variance Labor officiency variance

Explanation / Answer

1a) Material price variance = (0.33-0.30)*71000 = 2130 F

Material quantity variance = (5400*6-40500)*0.33 = 2673 U

1b) Labour rate variance = (6.8*7960-58904) = 4776 U

Labour efficiency variance = (5400*1.4-7960)*6.8 = 2720 U

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