Dawson Toys, Ltd., 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: 6 microns per toy at $0.33 per micron
Direct labor: 1.2 hours per toy at $7.10 per hour

During July, the company produced 5,100 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. 33,750 of these microns were still in inventory at the end of the month.
Direct labor: 6,420 direct labor-hours were worked at a cost of $50,076.

Required:
Compute the following variance for july:

a The materials price and quantity variances
b. The labor rate and efficiency variances

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Explanation:

To calculate the direct material price and quantity variance, we need to use the following formulas:

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (0.33 - 0.3)*72,000

Direct material price variance= $2,160 favorable

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Direct material quantity variance= (6*5,100 - 38,250)*0.33

Direct material quantity variance= $2,524.5 unfavorable

To calculate the direct labor time and rate variance, we need to use the following formulas:

Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate

Direct labor time (efficiency) variance= (1.2*5,100 - 6,420)*7.1

Direct labor time (efficiency) variance= $2,130 unfavorable

Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity

Direct labor rate variance= (7.1 - 7.8)*6,420

Direct labor rate variance= $4,494 unfavorable

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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