E9-5 Calculating Direct Materials and Direct Labor Variances [LO 9-3, 9-4] Cryst

Question

E9-5 Calculating Direct Materials and Direct Labor Variances [LO 9-3, 9-4] Crystal Charm Company makes handcrafted silver charms that attach to jewelry such as a necklace or bracalet. Each charm is adorned with two crystals of various colors. Standard costs follow Standard Quantity 0.45 oz. $24.00 per oz. 6.00 1.50 hrs. $13.00 per hr. Standard Unit Cost Standard (Rate) Slver Crystals Direct labor $ 10.80 $0.45 per crystal 2.70 19.50 During the month of Januar Crystal Charm made 1,540 charms The company used 663 ounces of silver total cost of $16,575 and 9,290 stals total cost of $399470), and paid for 2,460 actual direct labor hours cost of $30,750.00). Required: 1. Calculate Crystal Charm's direct materials variances for silver and crystals for the month of January. (Round your intermediate calculations and final answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Silver Crystals Direct Material Price Variance Direct Material Quantity Variance 2. Calculate Crystal Charm's direct labor variances for the month of January. (Round your intermediate calculations and final answers to 2 decimal places.Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Direct Labor Rate Variance Direct Labor Eficiency Variance

Explanation / Answer

Direct Material Price Variance =( Standard Price - Actual Price)* Actual Quantity Silver =(24-16575/663)*663 = ( 24-25)*663 = 663 unfavourable Crystals = ( 0.45-3994.70/9290)*9290 = (0.45-0.43)*9290 i= 185.80 favourable Direct Material Quntity Variance ( Standard Quantity - Actual Quantity )* Standard Rate Silver = ( (1540*0.45)-663)*24 i.e 720 favourable Charms = ((1540*6)-9290)*0.45 = 50 unfavourable Direct labour rate variance (Standard rate - Actual Rate )* Actual Hours ( 13-(30750/2460))*2460 i.e 1230 Favourable Direct labor efficiency variance = ( Standard hours - Actual Hours ) * Standard rate = (( 1540*1.5)-2460)*13 = 1950 unfavourable

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