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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:

7

microns per toy at

$0.35

per micron

Direct labor:

1.4

hours per toy at

$6.60

per hour.

During July, the company produced

4,600

Maze toys. Production data for the month on the toy follow:

Direct materials:

74,000

microns were purchased at a cost of

$0.34

per micron.

22,750

of these microns were still in inventory at the end of the month.

Direct Labor:

6,740

direct labor-hours were worked at a cost of

$49,202

Required:

1. Compute the following variances for July:

a. Direct materials price and quantity variances.

b. Direct labor rate and efficiency variances.

2. Prepare a brief explanation of the possible causes of each variance.

Direct materials: 7 microns per toy at SO.35 per micron Direct labor: 1.4 hours per toy at $6.60 per hour During July, the company produced 4,600 Maze toys. Production data for the month on the toy follow: Direct materials: 74,000 microns were purchased at a cost of S0.34 per micron. 33,750 of these microns were still in inventory at the end of the month. Direct labor: 6,740 direct labor-hours were worked at a cost of $49,202 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). Do not round intermediate calculations. Round final answer to the nearest whole dollar.) a. The materials price and quantity variances. 740 F Material price variance S Material quantity variance Ul b. The labor rate and efficiency variances. Labor rate variance Labor efficiency variance

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