Reference no: EM132501270

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: 8 microns per toy at $0.31 per micron

Direct labor: 1.5 hours per toy at $6.70 per hour

During July, the company produced 5,400 Maze toys. Production data for the month on the toy follow:

Direct materials: 72,000 microns were purchased at a cost of $0.29 per micron. 18,000 of these microns were still in inventory at the end of the month.

Direct labor: 8,700 direct labor-hours were worked at a cost of $63,510.

Required:

Problem 1. Compute the following variances for July:

A. The materials price and quantity variances.

1) Material Price variance

2) Material Quantity Variance

B. The labor rate and efficiency variances.

1) Labor Rate Variance

2) Labor Efficiency Variance