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: Silver Crystals Direct labor Standard Standard Price Quantity (Rate) 0.35 oz. $22.00 per oz. 4.00 $ 0.35 crystal 1.50 hrs. $11.00 per hr. Standard Unit Cost $ 7.70 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). 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.

Answer 1

1) Direct material price variance (Silver) = (22*507-11661) = 507 U

Direct material quantity variance (silver) = (1520*0.35-507)*22 = 550 F

Direct material price variance (Crystals) = 0.35*6130-2022.90 = 122.60 F

Direct material quantity variance (Crystals) = (1520*4-6130)0.35 = 17.50 U

2) Direct labor rate variance = (11*2430-25515) = 1215 F

Direct labor efficiency variance = (1520*1.5-2430)*11 = 1650 U