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 Price (Rate)			Standard Unit Cost
Silver	0.30	oz.		$	30.00	per oz.		$	9.00
Crystals	5.00			$	0.45	crystal			2.25
Direct labor	1.50	hrs.		$	19.00	per hr.			28.50

During the month of January, Crystal Charm made 1,610 charms. The company used 458 ounces of silver (total cost of $14,198) and 8,100 crystals (total cost of $3,483.00), and paid for 2,565 actual direct labor hours (cost of $47,452.50).

Required:

1. Calculate Crystal Charm’s direct materials variances for silver and crystals for the month of January.

2. Calculate Crystal Charm’s direct labor variances for the month of January.

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, and "None" for no effect (i.e., zero variance).)

	Silver Crystals Direct Material Price Variance Direct Material Quantity Variance

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, and "None" for no effect (i.e., zero variance).)

	Direct Labor Rate Variance Direct Labor Efficiency Variance

Answer 1

• Requirement 1

	Silver		Crystals
Direct Material Price Variance	$              458.00	Unfavourable-U	$                162.00	Favourable-F
Direct material Quantity Variance	$              750.00	Favourable - F	$                   22.50	Unfavourable-U

--Working for Silver

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                              30.00	-	$                    31.00	)	x	458
	-458
	Variance		$                  458.00			Unfavourable-U
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	483	-	458	)	x	$                       30.00
	750
	Variance		$                  750.00			Favourable-F

--Working for Crystals

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                                0.45	-	$                       0.43	)	x	8100
	162
	Variance		$                  162.00			Favourable-F
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	8050	-	8100	)	x	$                           0.45
	-22.5
	Variance		$                    22.50			Unfavourable-U

• Requirement 2

Labor Rate Variance	$                                                     1,282.50	Favourable-F
Labour Efficiency Variance	$                                                     2,850.00	Unfavourable-U

--Working

Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                              19.00	-	$                    18.50	)	x	2565
	1282.5
	Variance		$              1,282.50			Favourable-F
Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	2415	-	2565	)	x	$                        19.00
	-2850
	Variance		$              2,850.00			Unfavourable-U