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 Quantity Standard (Rate) Standard Unit Cost Silver 0.30 oz. $ 21.00 per oz. $ 6.30 Crystals 3.00 $ 0.30 per crystal 0.90 Direct labor 2.00 hrs. $ 10.00 per hr. 20.00 During the month of January, Crystal Charm made 1,510 charms. The company used 428 ounces of silver (total cost of $9,416) and 4,580 crystals (total cost of $1,282.40), and paid for 3,270 actual direct labor hours (cost of $31,065.00). Required:

Direct Material Price Variance Direct Material Quantity Variance for silver and crystal

Direct Labor Rate Variance Direct Labor Efficiency Variance for the month of january

Explanation / Answer

silver :

direct material price variance = (standard rate - actual rate# ) * actual quantity

=(21 - 22 ) * 428

= 428 unfav.

# actual rate = total actual cost / actual quantity

= 9416 / 428 = $ 22

direct material quantity variance = ( standard quantity# - actual quantity ) * standard rate

= (453 - 428 ) *21

=525 fav.

# standard quantity = standard quantity per unit * no. of units

= 0.30 * 1510

= 453 ounces

crystal :

direct material price variance = (standard rate - actual rate# ) * actual quantity

=(0.30 - 0.28) *4580

= 91.6 fav.

# actual rate = 1282.40 / 4580

= $ 0.28

direct material quantity variance = ( standard quantity# - actual quantity ) * standard rate

= (4530 - 4580 ) *0.30

= 15 unfav.

# standard quantity = 3 per unit *1510 no. of units

= 4530 crystals

Direct labour rate variance = (standard rate - actual rate# ) * actual hrs

= (10 - 9.5 ) *3270

= 1635 fav.

# actual rate = actual labour cost / actual hrs

=31065 / 3270 = $ 9.5

Direct labour efficiency variance = (standard hrs - actual hrs ) * standard rate

= (2*1510 - 3270) * 10

= 2500 unfav.

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