EXERCISE 10-8 Direct Materials and Direct Labor Variances LO10-1, LO10-2 Dawson Toys, Ltd., produces a...
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EXERCISE 10-8 Direct Materials and Direct Labor Variances LO10-1, LO10-2 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 $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 Direct labor: 4,000 direct labor-hours were worked at a cost of $88,000. Required 1. Compute the following variances for July: at the end of the month a. The materials price and quantity variances. b. The labor rate and efficiency variances 2. Prepare a brief explanation of the possible causes of each variance
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