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 0.50 oz. $ 22.00 per oz. $ 11.00 Crystals 2.00 $ 0.35 per crystal 0.70 Direct labor 1.50 hrs. $ 12.00 per hr. 18.00 During the month of January, Crystal Charm made 1,650 charms. The company used 785 ounces of silver (total cost of $18,055) and 3,350 crystals (total cost of $1,105.50), and paid for 2,625 actual direct labor hours (cost of $30,187.50). Required: 1. Calculate Crystal Charm’s direct materials variances for silver and crystals for the month of January. (Round your intermediate calculations and final answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) 2. Calculate Crystal Charm’s direct labor variances for the month of January. (Round your intermediate calculations and final answers to 2 decimal places.Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)

Explanation / Answer

1)Direct material variance =Actual cost -standard cost

Silver charm : 18055- [1650*11]

                      18055 -18150

                        -95 F

Material price variance = Actual cost -[AQ*SR]

                      18055- [785*22]

                       18055- 17270

                          785 U

Material quantity variance =SR[AQ-SQ]

                             22[785-(1650*.50)]

                             22[785 -825]

                              - 880 F

Cyrstal charm:

Total material variance = 1105.5-[1650*.7]

            1105.5 -1155

                -49.5F

Material price variance = 1105.5 - [3350*.35]

              1105.5 -1172.5

                -67F

Material quantity variance = .35[3350-(1650*2)]

           .35[3350-3300]

                17.5U

2)Total labor variance =actual cost-standard cost

         30187.5- [1650*18]

         30187.5- 29700

          487.5 U

labor rate variance =Actual cot -[AH*SR]

         30187.5- [2625*12]

            30187.5 - 31500

          - 1312.5 F

Labor efficiency variance =SR[AH-SH]

          12[2625-(1650*1.5)]

            12[2625-2475]

          1800 U

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