University Rings produces class rings. Its best-selling model has a direct materials standard of 12 grams of a special alloy per ring. This special alloy has a standard cost of $65.00 per gram. In the past month, University Rings purchased 12,300 grams of this alloy at a total cost of $797,040. A total of 12,100 grams were used last month to produce 1,000 rings.
Requirements
1. What is the actual cost per gram of the special alloy that University Rings paid last month?
2. What is the direct materials price variance?
3. What is the direct materials quantity variance?
4. How might the direct materials price variance for University Rings last month be causing the direct materials quantity variance?