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 Standard Price Standard (Rate) 0.35 oz. $22.00 per oz. 7.70 $ 0.35 per charm $11.00 per hr. Quantity Unit Cost Silver Crystals Direct labor 4.00 1.50 hrs. 1.40 16.50 During the month of January, Crystal Charm made 1,520 charms. The company used 507 ounces of silver total cost of $11,661) and 6,130 crystals (total cost of $2,022.90), and paid for 2,430 actual direct labor hours (cost of $25,515.00).

Explanation / Answer

Direct Labor rate variance = Actual quantity * Actual rate - Actual quantity * Standard rate

= 2430 hours * 10.5 - 2430 hours * 11

= 25515 - 26730 = 1215 favourable

Direct labor efficiency variance = Actual hours * standard rate - standard cost(standard hours * standard rate)

= 2430 * 11 - 25080(1520.16.5)

= 26730 - 25080 = 1650adverse.

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