Eg-? a ! culating Direct Materials and Drect La Dor variances LL g-3, g- Crystal

Question

Eg-? a ! culating Direct Materials and Drect La Dor variances LL g-3, g- 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 Standard Quantity Standard (Rate)Unit Cos S 12.65 Silver Crystals Direct labor 0.55 oz. $23.00 per oz. 3.00 0.40 per crystal 2.00 hrs. $13.00 per hr 1.20 26.00 During the month of January, Crystal Charm made 1,660 charms. The company used 873 ounces of silver (total cost of $20,952) and 5,030 crystals (total cost of $1,911.40), and paid for 3,470 actual direct labor hours (cost of $43,375.00). 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 Efficiency Variance

Explanation / Answer

Answer:- Material price variance = (Standard price – Actual price) * Actual quantity used

                                      

Silver = ($23.00 per oz. - $24.00 per oz.)*873 ounces    

                                       = $873 Unfavourable

Crystals = ($.40 per crystal - $.38 per crystal)*5030 crystal    

                                       = $100.60 Favourable

Material Quantity variance = (Standard Quantity- Actual Quantity)*Standard price

                                 Silver =(913 oz. – 873 oz.)*$ 23.00 per oz.

                                             = $920 Favourable

                                 Crystal =(4980 crystal. – 5030 crystal)* $.40 per crystal

                                             = $20 Unfavourable

Where:-

Standard quantity = Per units required *Actual Production

                    Silver=.55 oz.*1660 charms

                              = 913 oz.

                  Crystal= 3.00 crystal*1660 charms = 4980 crystal

Labor Rate variance = (Standard rate – Actual rate) * Actual hours

                                      

=($13.00 per hour. - $12.50 per hour)*3470 hours    

                                       = $1736 Favourable

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