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:

During the month of January, Crystal Charm made 1,500 charms. The company used 860 ounces of silver (total cost of $21,500) and 6,050 crystals (total cost of $2,601.50), and paid for 2,400 actual direct labor hours (cost of $32,400.00).

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.)

Standard Quantity Standard (Rate) Standard Unit Cost Silver 0.60 oz. $ 24.00 per oz. $ 14.40 Crystals 4.00 $ 0.45 per crystal 1.80 Direct labor 1.50 hrs. $ 14.00 per hr. 21.00

Explanation / Answer

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.)

Silver :

material price variance = (standard price-actual price)actual quantity

                                 = (24*860-21500)

Material price variance = 860 U

Material usage variance = (standard quantity-actual quantity)standard price

                                   = (1500*.60-860)*24

Material usage variance = 960 F

Crystals :

material price variance = (standard price-actual price)actual quantity

                                 = (0.45*6050-2601.50)

Material price variance = 121 F

Material usage variance = (standard quantity-actual quantity)standard price

                                   = (1500*4-6050)*0.45

Material usage variance = 22.5 U

Labour variance

labour rate variance = (standard rate-actual rate)actual hours

                                 = (14*2400-32400)

Labour rate variance = 1200 F

Labour efficiency variance = (standard hours-actual hours)standard rate

                                   = (1500*1.5-2400)*14

Labour efficiency variance = 2100 U

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