and has established the following standards for the Maze toy: Direct materials: 8 microns per toy at $0.32 per micron Direct labor: 1.4 hours per toy at $6.90 per hour The company has recently reated a standard cost system to help control During July, the company produced 4,800 Maze toys. The toy's production data for the month are as follows: Direct materials: 73,000 microns were purchased at a cost of $0.29 per micron. 25,000 of these microns were still in inventory at end of the month. Direct labor: 7,320 direct labor-hours were worked at a cost of $52,704. Required: 1. Compute the following variances for July: (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavora and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations. Ro 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 1a. Material quantity variance 1b. Labor rate variance 1b. Labor efficiency variance
and has established the following standards for the Maze toy: Direct materials: 8 microns per toy at $0.32 per micron Direct labor: 1.4 hours per toy at $6.90 per hour The company has recently reated a standard cost system to help control During July, the company produced 4,800 Maze toys. The toy's production data for the month are as follows: Direct materials: 73,000 microns were purchased at a cost of $0.29 per micron. 25,000 of these microns were still in inventory at end of the month. Direct labor: 7,320 direct labor-hours were worked at a cost of $52,704. Required: 1. Compute the following variances for July: (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavora and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations. Ro 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 1a. Material quantity variance 1b. Labor rate variance 1b. Labor efficiency variance
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Dawson Toys, Limited, produces a toy called the Maze. The company has recently created a standard cost system to help control cos
and has established the following standards for the Maze toy:
Direct materials: 8 microns per toy at $0.32 per micron
Direct labor: 1.4 hours per toy at $6.90 per hour
During July, the company produced 4,800 Maze toys. The toy's production data for the month are as follows:
Direct materials: 73,000 microns were purchased at a cost of $0.29 per micron. 25,000 of these microns were still in inventory at the
end of the month.
Direct labor. 7,320 direct labor-hours were worked at a cost of $52,704.
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. Rounc
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
1a. Material quantity variance
1b. Labor rate variance
1b. Labor efficiency variance
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