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: 10 microns per toy at 0.40 per micron

Direct labour: 1.0 hours per toy at 9 per hour

During July, the company produced 2,000 Maze toys. Production data for the month on the toy follow:

Direct materials: 26,600 microns were purchased for use in production at a cost of 0.32 per micron. Some 4,000 of these microns were still in inventory at the end of the month.

Direct labour: 2,400 direct labour-hours were worked at the cost of 26,400.

Required:
1.	Compute the following variances for July:
	(a)	Compute direct materials price variance

		Compute direct materials quantity variance

	(b)	Compute direct labour rate variance.

		Compute direct labour efficiency variance.

2.	(a)	Identify which of the following is NOT a possible cause of a favourable material price variance.
		multiple choice 1 Purchasing a lower grade material at a discount Buying large quantities to take advantage of quantity discounts An increase in the market price of the material An efficient purchasing department
	(b)	Identify which of the following is a possible reason for an unfavourable material quantity variance.
		multiple choice 2 Properly adjusted machines, and quality materials Less materials used to produce the actual output than were called for by the standard Well trained and supervised workers Outdated standards
	(c)	Identify which of the following is NOT a possible cause of an unfavourable labour rate variance.
		multiple choice 3 An increase in wages that has not been reflected in the standards Unanticipated overtime Actual average wage rate was higher than the standard wage rate Less skilled workers employed
	(d)	Identify which of the following is a possible reason for an unfavourable labour efficiency variance.
		multiple choice 4 A reduction in output due to decreased demand for the companys products High quality materials requiring less labour time to process Well trained and supervised workers Actual number of labour hours was less than the standard labour hours allowed for the actual output