EXERCISE 10-7 Direct Materials Variances LO10-1 Refer to the data in Exercise 10-6.

Assume that instead of producing 4,000 units during the month, the company produced only 3,000 units, using 14.750 pounds of material. (The rest of the material purchased remained in raw materials inventory.) Required: Compute the materials price and quantity variances for the month.

EXERCISE 10-8 Direct Materials and Direct Labor Variances LO10-1,LO10-22 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 the end of the month.

Direct labor: 4,000 direct labor-hours were worked at a cost of $88,000

Required I. Compute the following variances for July

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.