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: 6 microns per toy at $0.31 per micron
Direct labor: 1.2 hours per toy at $6.90 per hour
During July, the company produced 4,700 Maze toys. Production data for the month on the toy follow:
Direct materials: 79,000 microns were purchased at a cost of $0.28 per micron. 43,750 of these microns were still in inventory at the end of the month.
Direct labor: 6,140 direct labor-hours were worked at a cost of $45,436.
.
find the materials price and quantity variances.

find the labor rate and efficiency variances.

Direct materials: 79,000 microns were purchased at a cost of $0.28 per micron. 43,750 of these microns were still in inventory at the end of the month.

Direct labor: 6,140 direct labor-hours were worked at a cost of $45,436.

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

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

Direct material price variance= (0.31 - 0.28)*79,000

Direct material price variance= $2,370 favorable

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

Standard quantity= 6*4,700= 28,200

Actual quantity= 35,250

Direct material quantity variance= (28,200 - 35,250)*0.31

Direct material quantity variance= $2,185.5 unfavorable

To calculate the direct labor rate and efficiency 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*4,700 - 6,140)*6.9

Direct labor time (efficiency) variance= $3,450 unfavorable

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

Actual rate= 45,436/6,140= $7.4

Direct labor rate variance= (6.9 - 7.4)*6,140

Direct labor rate variance= $3,070 unfavorable