Answer :-

a)

Standard Quantity (SQ)	3000*6	$18,000
Standard Price (SP)		1.30
Actual Quantity(AQ)	25,000-5,000	20,000
Actual Price(AP)		0.48

Direct material price variance :-

Material Price Variance = AQ *(SP - AP)

Material Price Variance = 25,000*(0.50- 0.48)

Material Price Variance = $500

Material Price Variance = $500 F

  Direct material Quqntity variance :-

Material Quantity Variance = SP* (SQ - AQ)

Material Quantity Variance = 0.50* (18,000- 20,000)

Material Quantity Variance = -1,000

Material Quantity Variance = 1,000 U

b)

Actual hours	36,000/4,000	$9.00
Standard hours	1.30*3000	3,900 hrs

Direct labor rate variance :-

Direct labor rate variance = (std.rate - actual rate )*Actual hrs

Direct labor rate variance  = ($8.00-$9.00)*4,000

Direct labor rate variance  = - $4,000

Direct labor rate variance  = $ 4,000 Unfavourable

Direct labor Efficiency variance :-

Direct labor Efficiency variance = (std.hrs - actual hrs )*Std.rate

Direct labor Efficiency variance   = (3,900-4,000)*8

Direct labor Efficiency variance   = - $800

Direct labor Efficiency variance   = $ 800 Unfavourable

2)

2.

Variances arise when there is different between the standard (the planned cost) and the cost which has actually incurred. Standard cost means cost that should have been incurred whereas actual cost means cost that has actually been incurred and any difference between the both leads to variance.

Explanation

Variance arises when there is a difference between the standard cost and the actual cost. Based on the type of variance, it can either be favorable or unfavorable.

In the given case, the following variances have been computed:

Direct material price variance: The standard price ($0.50) per unit is more than the actual price of $0.48 and this means that the business has saved $0.02 on per unit of the materials purchased. Thus, there exists a favorable variance of $500 ($0.02 per unit × 25,000 microns).

Direct material quantity variance: The standard quantity of material that should be used to produce 3000 toys (that is 18,000 microns) is less than the actual microns used (that is, 20,000). Since the standard quantity that should have been used is less than the actual quantity used, there exists an unfavorable variance of $1,000.

Direct labor rate variance: The standard rate ($8) per hour that should have been paid to the laborers is lower than the rate at which the laborers were actually paid for the actual number of hours worked. Since the standard rate is lower than the actual rate per hour, there exists an unfavorable variance of $4,000.

Direct labor efficiency variance: The standard hours (3,900 hours) to produce the 3,000 toys are lower than the actual hours. This means that the labors have actually taken more than the number of hours that should have been taken to complete those toys. Thus, there exists an unfavorable variance of $800.