E9-5 Calculating Direct Materials and Direct Labor Variances [LO 9-3, 9-4] Cryst
ID: 2522036 • 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:
During the month of January, Crystal Charm made 1,610 charms. The company used 458 ounces of silver (total cost of $14,198) and 8,100 crystals (total cost of $3,483.00), and paid for 2,565 actual direct labor hours (cost of $47,452.50).
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.)
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.)
Explanation / Answer
Answer for 1)
Direct material price variance:
(STD. Price-actual price)actual quantity
For silver:($30-($14198/458 ounce))×458 ounce
$458 U
For crystal:($0.45-($3483/8100 crystal)×8100 crystals
$162 F
Direct material quantity variance:
(STD. Quantity -actual quantity)std. Rate
For silver:((1610 charms×0.30ounce)-458 ounce)×$30
$750 F
For crystal:((1610 charms×5 crystal)-8100 charms)×$0.45
$22.5 U
Answer for 2)
Direct labour rate variance:
(STD. Rate - actual rate)×actual hours
=(($19-($47452.5/2565hours))×2565 hours
=$1282.5 F
Direct labour efficiency variance:
(STD. Hours -Actual hours)×std. Rate
((1.5 hours×1610 charms)-2565 hours)×$19
=$2850 U
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