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	0.40	oz.		$	23.00	per oz.		$	9.20
Crystals	5.00			$	0.40	per crystal			2.00
Direct labor	2.00	hrs.		$	12.00	per hr.			24.00

During the month of January, Crystal Charm made 1,530 charms. The company used 577 ounces of silver (total cost of $13,848) and 7,700 crystals (total cost of $2,926.00), and paid for 3,210 actual direct labor hours (cost of $36,915.00).

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.)

Answer 1

• Requirement 1

	Silver		Crystals
Direct Material Price Variance	$              577.00	Unfavourable-U	$                154.00	Favourable-F
Direct material Quantity Variance	$              805.00	Favourable - F	$             2,835.20	Unfavourable-U

--Working - Silver

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                              23.00	-	$                    24.00	)	x	577
	-577
	Variance		$                  577.00			Unfavourable-U
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	612	-	577	)	x	$                        23.00
	805
	Variance		$                  805.00			Favourable-F

--Working : Crystals

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                                0.40	-	$                       0.38	)	x	7700
	154
	Variance		$                  154.00			Favourable-F
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	612	-	7700	)	x	$                           0.40
	-2835.2
	Variance		$              2,835.20			Unfavourable-U

• Requirement 2

Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                              10.00	-	$                    11.50	)	x	3210
	-4815
	Variance		$              4,815.00			Unfavourable-U
Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	3060	-	3210	)	x	$                        10.00
	-1500
	Variance		$              1,500.00			Unfavourable-U
Labor Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$                      30,600.00	-	$            36,915.00	)
	-6315
	Variance		$              6,315.00			Unfavourable-U