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 adomed with two crystals of various colors. Standard costs follow: Standard Unit Cost Standard Quantity Standard (Rate) 0.50 oz. $25.00 per oz. 7.00 $0.50 per crystal 2.00 hrs. $14.00 per hr. Silver Crystals Direct labor $12.50 Crystal 3.50 28.00 $14.00 During the month of January, Crystal Charm made 1,550 charms. The company used 745 ounces of silver (total cost of $19,370) and 10,900 crystals (total cost of $5,232.00), and paid for 3,250 actual direct labor hours (cost of $43,875.00). 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

Answer 1

Silver SQ = Particulars Direct Material 1550 X SQL 775 0.50 = SP 25 775 AQ 745 26 Material Price Variance (MPV) = ( SP-AP) AQ >>MPV = 25 - 26 ) * >>MPV = -745.00 Unfavorable 745 Material Quantity Variance (MQV) = ( SQ - AQ) SP >>MQV = 1 775 - 745 ) * 25

Crystals SQ = Particulars Direct Material 1550 X SQL 10850 7.00 = SP 0.5 10850 AQ 10900 AP 0.48 Material Price Variance (MPV) = ( SP-AP) AQ >>MPV = 1 0.5 - 0.48 ) * >>MPV = 218.00 Favorable 10900 Material Quantity Variance (MQV) = ( SQ-AQ) SP >>MQV = 1 10850 - 10900 ) * 0.5 >>MQV = -25.00 Unfavorable Note-1 SQ = Standard Quantity for Actual output SP = Standard Price per Raw material AQ = Actual Quantity consumed AP = Actual Price per Raw material

SH = Particulars Direct Labour 1550 X SH 3100 2 = 3100 SRL 14 3250 AR 13.5 |Labour Rate Variance (LrV) = ( SR - AR ) AHP >>LRV = ( 14 - 13.5 ) * >>LRV = 1625 Favorable 3250 Labour Efficiency Variance (LEV) = ( SH - AHW) SR >>LEV = 1 3100 - 3250 * 14 >>LEV = -2100 Unfavorable Note-1 SH = Standard Hours per Actual Output SR = Standard Rate per Hour AHP = Actual Hours Paid AR = Actual Rate per Hour.