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: 8 microns per toy at $0.32 per micron Direct labor: 1.1 hours per toy at $7.10 per hour During July, the company produced 5,300 Maze toys. The toy's production data for the month are as follows: Direct materials: 72,000 microns were purchased at a cost of $0.30 per micron. 19,000 of these microns were still in Inventory at the end of the month. Direct labor. 6,230 direct labor-hours were worked at a cost of $47,971. Required: 1. Compute the following variances for July: (Indicate the effect of each varlance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (l.e., zero varlance). Input all amounts as positive values. Do not round Intermediate calculations. Round final answers 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
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: 8 microns per toy at $0.32 per micron Direct labor: 1.1 hours per toy at $7.10 per hour During July, the company produced 5,300 Maze toys. The toy's production data for the month are as follows: Direct materials: 72,000 microns were purchased at a cost of $0.30 per micron. 19,000 of these microns were still in Inventory at the end of the month. Direct labor. 6,230 direct labor-hours were worked at a cost of $47,971. Required: 1. Compute the following variances for July: (Indicate the effect of each varlance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (l.e., zero varlance). Input all amounts as positive values. Do not round Intermediate calculations. Round final answers 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
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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 costs and has established the following standards for the Maze toy:
Direct materials: 8 microns per toy at $0.32 per micron
Direct labor: 1.1 hours per toy at $7.10 per hour
During July, the company produced 5,300 Maze toys. The toy's production data for the month are as follows:
Direct materials: 72,000 microns were purchased at a cost of $0.30 per micron. 19,000 of these microns were still in
Inventory at the end of the month.
Direct labor. 6,230 direct labor-hours were worked at a cost of $47,971.
Required:
1. Compute the following variances for July: (Indicate the effect of each varlance by selecting "F" for favorable, "U" for
unfavorable, and "None" for no effect (l.e., zero varlance). Input all amounts as positive values. Do not round
Intermediate calculations. Round final answers 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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