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 jowory such as a necklace or bracelet. Each charm is adomed with two brystals of venous colors Standard costs Standard Unit Cost Standard Quantity 0.55 3.00 2.00 Crystals Standard Rate) $23.00 per ol $0.40 per crystal $13.00 per Direct labor During the month of January, Crystal Charm made 1,680 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 materiais 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, for unfavorable) Direct Material Price Variance Direct Material Quantity Variance

Answer 1

Requirement 1:

Silver:

Standard quantity allowed = Standard quantity per unit * Actual output
Standard quantity allowed = 0.55 * 1,680
Standard quantity allowed = 924

Direct material price variance = Actual materials cost - Actual quantity used * Standard price per ounce
Direct material price variance = $20,952 - 873 * $23.00
Direct material price variance = $873 Unfavorable

Direct material quantity variance = Standard price per ounce * (Actual quantity used - Standard quantity allowed)
Direct material quantity variance = $23.00 * (873 - 924)
Direct material quantity variance = $1,173 Favorable

Crystals:

Standard quantity allowed = Standard quantity per unit * Actual output
Standard quantity allowed = 3.00 * 1,680
Standard quantity allowed = 5,040

Direct material price variance = Actual materials cost - Actual quantity used * Standard price per ounce
Direct material price variance = $1,911.40 - 5,040 * $0.40
Direct material price variance = $104.60 Favorable

Direct material quantity variance = Standard price per ounce * (Actual quantity used - Standard quantity allowed)
Direct material quantity variance = $0.40 * (5,030 - 5,040)
Direct material quantity variance = $4 Favorable

Requirement 2:

Standard labor hours allowed = Standard labor hours per unit * Actual output
Standard labor hours allowed = 2.00 * 1,680
Standard labor hours allowed = 3,360

Direct labor rate variance = Actual labor cost - Actual labor hours * Standard rate per hour
Direct labor rate variance = $43,375 - 3,470 * $13.00
Direct labor rate variance = $1,735 Favorable

Direct labor efficiency variance = Standard rate per hour * (Actual labor hours - Standard labor hours allowed)
Direct labor efficiency variance = $13.00 * (3,470 - 3,360)
Direct labor efficiency variance = $1,430 Unfavorable