calculating the material variance with the following example. Crown Jewelry prod

Question

calculating the material variance with the following example. Crown Jewelry produced 1,200 rings during March. The standard cost of each ounce of gold used in a ring is $325 per ounce. The standard quantity of material for each ring is a half ounce of gold per ring. The cost of gold purchased and used in March was $224,000 at $350 per ounce. Calculate the material price variance and the material quantity variance, indicating whether these variances are favorable or unfavorable. Be sure to include your calculations.

Explanation / Answer

Material price variance = ($350-$325)*224000/350 = $16000 unfvorable

Material quantity variance = (1200*0.5-640)*325 = $13000 unforable

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