Lucky 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, Lucky Charm made 1,500 charms. The company used 350 ounces of silver (total cost of \($7,350)\) and 3,050 crystals (total cost of \($701.50),\) and paid for 2,400 actual direct labor hours (cost of \($34,800).\)

Required:

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

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

3. Identify a possible cause of each variance.

Transcribed Image Text:

Standard Quantity Standard Price (Rate) Standard Unit Cost Direct costs Silver 0.25 oz. $20.00 per oz. Crystals 2 Direct labor 1.5 hrs. 15.00 per hr. 0.25 per each $ 5.00 0.50 22.50