The Top Company uses a standard costing system and produces custom made plastic toys using the following inputs - and actual data:

Input

Standard Input per Toy

Standard Cost of Input

ACTUALCost to Produce 200,000 Toys

ACTUALQuantity Used to Produce 200,000 Toys

Plastic

150g

$0.08/gram

$2,850,000

29,800,000 grams

Direct Labour

0.12 hours

$10.00/hour

1. What is the standard cost of one toy?
2. Calculate the Material PRICE variance using actual production numbers given above and label itFAVOURABLEorUNFAVOURABLE.
3. Calculate the Material QUANTITY variance using actual production numbers given above and label whether it isFAVOURABLEorUNFAVOURABLE.
4. Should only unfavourable variances be investigated - WHY or WHY NOT?