Problem - Topper Toys has developed a new toy called the Brainbuster. The company has a standard cost system to help control costs and has established the following standards for Brainbuster:
Direct Materials 8 diodes per toy at $0.30 per diode
Direct Labor 1.2 hours per toy at $7 per hour
During August, the company produced 5,000 Brainbuster toys. Production data on the toy for August is as follows:
Direct Materials: 70,000 diodes were purchased for use in production at a cost of $0.28 per diode. Some 20,000 of these diodes were still in inventory at the end of the month.
Direct Labor: 6,400 direct labor hours were worked at a cost of $48,000.
1. The direct materials price variance for August is
a. $1,000 favorable
b. $1,000 unfavorable
c. $2,000 favorable
d. $2,000 unfavorable
2. The direct materials usage variance for August is
a. $1,000 favorable
b. $1,000 unfavorable
c. $3,000 favorable
d. $3,000 unfavorable
3. The direct labor rate variance for August is
a. $6,000 favorable
b. $6,000 unfavorable
c. 3,200 favorable
d. 3,200 unfavorable