E9–5 Time allowed: 30 minutes 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:

During July, the company produced 3,000 Maze toys. Production data for the month on the toy follow:

Required 1 Compute the following variances for July:

(a) Direct materials price and quantity variances.

(b) Direct labour rate and efficiency variances.
2 Prepare a brief explanation of the significance and possible causes of each variance.

Problems

Transcribed Image Text:

Direct materials: 6 microns per toy at 0.50 per micron Direct labour: 1.3 hours per toy at 8 per hour