Rings produces class rings. Its best-selling model has a direct materials standard of 12grams of a special alloy per ring. This special alloy has a standard cost of $65.30per gram. In the past month, the company purchased 13,000grams of this alloy at a total cost of $847,600

A total of 12,500grams were used last month to produce 1,000rings.

Read the

requirements1.

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)	x (	(2)	-	(3)	)	=	DM price variance
		x (		-		)	=		(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 interim calculations to the nearest cent and your variance amount to the nearest whole dollar. Label the variance as favorable (F) or unfavorable (U).)

	(5)	x (	(6)	-	(7)	)	=	DM quantity variance
		x (		-		)	=		(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

(11)

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)

Actual price

Actual quantity purchased

Actual quantity used

Standard hours allowed

Standard price

Standard quantity allowed

(2)

Actual price

Actual quantity purchased

Actual quantity used

Standard hours allowed

Standard price

Standard quantity allowed

(3)

Actual price

Actual quantity purchased

Actual quantity used

Standard hours allowed

Standard price

Standard quantity allowed

(4)

F

U

(5)

Actual price

Actual quantity purchased

Actual quantity used

Standard hours allowed

Standard price

Standard quantity allowed

(6)

Actual price

Actual quantity purchased

Actual quantity used

Standard hours allowed

Standard price

Standard quantity allowed

(7)

Actual price

Actual quantity purchased

Actual quantity used

Standard hours allowed

Standard price

Standard quantity allowed

(8)

U

F

(9)

favorable

unfavorable

(10)

higher-quality alloy at a higher price

lower-quality alloy at a lower price

(11)

had to use more

was able to use less

(12)

unfavorable

favorable