Materials price and quantity variances
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 $0.33 per micron Direct labor: 1.1 hours per toy at $6.90 per hour During July, the company produced 5,300 Maze toys. Production data for the month on the toy follow: Direct materials: 80,000 microns were purchased at a cost of $0.30 per micron. 40,250 of these microns were still in inventory at the end of the month. Direct labor: 6,330 direct labor-hours were worked at a cost of $46,209.
Compute the following variances for July:
a) Materials price and quantity variances.