E9-5 Calculating Direct Materials and Direct Labor Variances [LO 9-3, 9-4] Cryst
ID: 2515047 • Letter: E
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 bracelet. Each charm is adorned with two crystals of various colors. Standard costs follow: Standard QuantityStandard (Rate) 045 oz. $21.00 per oz. 8.00 0.30 per crystal 2.00 hrs. $11.00 per hr. Standard Unit Cost Silver $ 9.45 Crystals Direct labor 2.40 22.00 During the month of January, Crystal Charm made 1,640 charms. The company used 703 ounces of silver (total cost of $15,466) and 13,170 crystals (total cost of $3,687.60), and paid for 3,530 actual direct labor hours (cost of $37,065.00). 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 VarianceExplanation / Answer
Answer
Standard Quantity (SQ) for actual output of 1640 charm = 1640 charms x 0.45 oz = 738 ounces [SQ]
Actual Quantity (AQ) = 703 ounces, Actual Rate (AR) = $15466/703 ounces = $22 per oz [AR]
Standard Rate (SR) = $21 per oz
Direct Material Price variance = (SR – AR) x AQ = ($21 - $22) x 703 ounces = 703 Unfavourable.
Direct material Quantity variance = (SQ – AQ) x SR = (738 ounces – 703 ounces) x $21 = 735 favourable
Standard Quantity (SQ) for actual output of 1640 charm = 1640 charms x 8 = 13120 crystals [SQ]
Actual Quantity (AQ) = 13170 crystals, Actual Rate (AR) = $3687.6/13170 = $0.28 per crystals [AR]
Standard Rate (SR) = $0.3 per crystals
Direct Material Price variance = (SR – AR) x AQ = ($0.3 - $0.28) x 13170 crystals = 263.4 Favourable.
Direct material Quantity variance = (SQ – AQ) x SR = (13120 crystals – 13170 crystals) x $0.3 = 15 UnFavourable
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.