Dawson Toys, Limited, produces a toy called the Maze. The company has recently created 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: 1.2 hours per toy at $6.90 per hour During July, the company produced 4,700 Maze toys. The toy's production data for the month are as follows: Direct materials: 76,000 microns were purchased at a cost of $0.30 per micron. 34,875 of these microns were still in inventory at the end of the month. Direct labor. 6,140 direct labor-hours were worked at a cost of $46,050. 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. Round final answer to the nearest whole dollar amount.) a. The materials price and quantity variances. b. The labor rate and efficiency variances.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Dawson Toys, Limited, produces a toy
called the Maze. The company has recently
created 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: 1.2 hours per toy at $6.90 per
hour
During July, the company produced 4,700
Maze toys. The toy's production data for
the month are as follows:
Direct materials: 76,000 microns were
purchased at a cost of $0.30 per micron.
34,875 of these microns were still in
inventory at the end of the month.
Direct labor. 6,140 direct labor-hours were
worked at a cost of $46,050.
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. Round final answer to the
nearest whole dollar amount.)
a. The materials price and quantity
variances.
b. The labor rate and efficiency variances.
Transcribed Image Text:Dawson Toys, Limited, produces a toy called the Maze. The company has recently created 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: 1.2 hours per toy at $6.90 per hour During July, the company produced 4,700 Maze toys. The toy's production data for the month are as follows: Direct materials: 76,000 microns were purchased at a cost of $0.30 per micron. 34,875 of these microns were still in inventory at the end of the month. Direct labor. 6,140 direct labor-hours were worked at a cost of $46,050. 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. Round final answer to the nearest whole dollar amount.) a. The materials price and quantity variances. b. The labor rate and efficiency variances.
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