Accting hw 10-7 - than expected. This could be materials...

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David Stark 10-7 Standards Actual Maze toys produced 3000 3000 Microns used  18,000  20,000 Cost of individual micron  $0.50   $0.48  Cost of microns used  $9,000   $9,600  Hours Worked  3,900   4,000  Cost of individual hour  $8.00   $9.00  Cost of hours worked  31,200   36,000  1) Direct materials price variance  $(400) Direct materials quantitiy variance  $1,000  Direct labor rate variance  $4,000  Direct labor efficiency variance  $800  2)The price variance was off because Dawson Toys was able to get a better price than the standards indicated. This was good. The quantity variance was off because it took more microns to produce the toys
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Unformatted text preview: than expected. This could be materials that arrived in bad condition or were mishandled and broken in the production process Labor rate variance was off because it cost more per hour to pay labor. Since more hours were worked, maybe there was overtime pay involved. Labor efficiency was slightly over the expected value, as more hours were worked. If materials were damaged in the process, or new workers were hired who had to train, this could explain why more hours worked....
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This note was uploaded on 09/04/2011 for the course ECON 161 taught by Professor Jamesbaker during the Fall '11 term at University of Houston.

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