Problem $1(29$ points$)$

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\mathrm{.}50$ per micron

Direct labor: $1\mathrm{.}3$ 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: $25000$ microns were purchased at a cost of $$1\mathrm{.}48$ per

micron. $5000$ of these microns were still in inventory at the end of the month.

Direct labor: $4000$ direct labor$-$hours were worked at a cost of $$88,000.$

Compute the following variances for July using either the charts below or formulas, showing your work, and identify if they are favorable or unfavorable to the company:

The materials price and quantity variances

Actual Quantity of Input, at

Actual Price $($AQ $\backslash$times AP$)$

Actual Quantity of Input, at Standard Price $($AQ $\backslash$times SP$)$

Standard Quantity

Allowed for Output, at Standard Price $(SQSP)$

Materials price variance:

Materials quantity variance: