Hallmark Rings produces class rings. Its best-selling model has a direct materials standard of 15 grams of a special alloy per ring. This special alloy has a standard cost of $64.60 per gram. In the past month, the company purchased 15,600 grams of this alloy at a total cost of $1,001,520. A total of 15,300 grams were used last month to produce 1,000 rings Read the requirements! (2) rim Requirement 1. What is the actual cost per gram of the special alloy that Hallmark Rings purchased last month? (Round your answer to the nearest cent.) The actual cost per gram of the special alloy that Hallmark Rings purchased last month is Requirement 2. What is the direct material price variance? (Abbreviations used: DM = Direct materials) Begin by determining the formula for the price variance, then compute the price variance for direct materials. (Enter the variance as a positive number. Round interim calculations to the nearest cent and your variance amount to the nearest whole dollar. Label the variance as favorable (F) or unfavorable (U).) (1) (3) DM price variance (4) Requirement 3. What is the direct material quantity variance? (Abbreviations used: DM = Direct materials) Determine the formula for the quantity variance, then compute the quantity variance for direct materials. (Enter the variance as a positive number. Round calculations to the nearest cent and your variance amount to the nearest whole dollar. Label the variance as favorable (F) or unfavorable (U).) (5) - DM quantity variance (8) Requirement 4. How might the direct material price variance for the company last month be causing the direct material quantity variance? The (9) direct material price variance might mean that Hallmark Rings purchased a (10) As a result, the company alloy than the standard allows. This accounts for the (12) quantity (efficiency) variance 1: Requirements 1. What is the actual cost per gram of the special alloy that Hallmark Rings purchased last month? 2. What is the direct material price variance? 3. What is the direct material quantity variance? 4. How might the direct material price variance for the company last month be causing the direct material quantity variance? (1) O Standard hours allowed Standard hours allowed Actual price Standard price Actual price Standard price Actual quantity purchased Standard quantity allowed Actual quantity purchased Standard quantity allowed Actual quantity used Actual quantity used Standard hours allowed (5) O Standard hours allowed Actual price Standard price OF Actual price Standard price Actual quantity purchased Standard quantity allowed U Actual quantity purchased Standard quantity allowed Actual quantity used Actual quantity used (6) Standard hours allowed Standard hours allowed (8) O Actual price O Standard price Actual price Standard price OU Actual quantity purchased Standard quantity allowed O Actual quantity purchased Standard quantity allowed Actual quantity used Actual quantity used 2) OF (9) (10) (11) favorable unfavorable higher-quality alloy at a higher price lower-quality alloy at a lower price had to use more was able to use less (12) O unfavorable favorable
