Question

Direct materials: 6 microns per toy at $1.50 per micron Direct labor: 1.3 hours per toy at $21 per hour During July, the company produced 3,000 Maze toys. The toy's production data for the month are as follows: Direct materials: 25,000 microns were purchased at a cost of $1.48 per micron. 5,000 of these microns were still in inventory at the end of the month. Direct labor: 4,000 direct labor-hours were worked at a cost of $88,000. 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.) a. The materials price and quantity variances. b. The labor rate and efficiency variances.

Answer 1

a. Material price variance = ( standard price - Actual Price )* Actual quantity

= ( $1.50 - $1.48) * 25,000

= $0.02 * 25,000

= $5,000 F.

material quantity variance = (standard quantity - Actual quantity) * standard price

= ( 18,000 - 20,000) * $1.50

= 2000* $1.50

= $3,000 U.

b. Labor rate variance = ( standard rate - Actual rate)* Actual quantity

= ( $21 - $22) * 4,000

= $1 * 4000

= $4,000 U

labour efficiency variance = ( Standard hour - Actual hour) * Standard rate

= ( 3,900 - 4000) *$21

= 100 * $21

= $2,100 U

Step-by-step explanation:

1. standard quantity is being calculated by multiplying standard quantity per unit by actual production unit = 6 * 3000 = 18,000

2. actual quantity will be actual quantity used = unit purchased - closing unventory = 25,000 - 5000 = 20,000

3. Standard hour = standard hour per unit * actual production

= 1.3 * 3000 = 3900 hours

Answer 2

1a. 500 favourable and 3000 unfavorable

1b. $4000 favorable and $2100 unfavorable

Step-by-step explanation:

See attached file