Reference no: EM132670770

Topper Toys has developed a new toy called the Brain buster. The company has a standard cost system to help control costs and has established the following standards for the Brain buster toy.

Direct material: 8 diodes per day at $ 0.30 per diode

Direct labor: 0.6 hours per toy at $14 per hour

During the august, the company produced 5,000 Brain buster toys. Production data on the toy for August follow.

Direct material: 7,0000 diodes were purchased at cost of $0.28 per diode. 20,000 of these diodes were still in inventory at the end of month.

Direct labor: 3,200 direct labor hours were worked at a cost $48,000

Required:

Problem 1. Compute the following variances for August

• Direct material price and quantity variance
• Direct labor rate and efficiency variance.

Problem 2. Explain the every numerical parts clearly you have done in question 1.

Problem 3. Prepare brief explanation of the possible causes of each variance.