Crystal Charm Company makes handcrafted silver charms that attach to jewelry suc

Question

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)Unit 0.65 oz. $25.00 per oz. Standard $ 16.25 Silver Crystals Direct labor 2.50 30.00 2.00 hrs. $15.00 per hr During the month of January, Crystal Charm made 1,500 charms. The company used 935 ounces of silver (total cost of $24,310) and 7,550 crystals (total cost of $3,624.00), and paid for 3,150 actual direct labor hours (cost of $45,675.00) 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 ndicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Silver Crystals Direct Material Price Variance Direct Material Quantity Variance

Explanation / Answer

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

Silver = ($25.00 per oz. - $26.00 per oz.)*935 ounces

                                       = $935 Unfavourable

Crystals = ($.50 per crystal - $.48 per crystal)*7550 crystal     

                                       = $151 Favourable

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

                                 Silver =(975 oz. – 935 oz.)*$ 25.00 per oz.

                                             = $1000 Favourable

                                 Crystal =(7500 crystal. – 7550 crystal)* $.50 per crystal

                                             = $25 Unfavourable

Where:-

Standard quantity = Per units required *Actual Production

                    Silver=.65 oz.*1500 charms

                              = 975 oz.

                  Crystal= 5.00 crystal*1500 charms = 7500 crystal

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

=($15.00 per hour. - $14.50 per hour)*3150 hours

= $1575 Favourable

Labor Efficiency variance = (Standard Hours- Actual hours)*Standard rate per hour

                                           =(3000 hours – 3150 hours)*$ 15 per hour

                                             = $2250 Unfavourable

                                

Where:-

Standard Hours = Per hours required *Actual Production

                           =2 hours per charms*1500 charms

                            =3000 hours

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