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 1,800 charms. The company used 420 ounces of silver (total cost of $9,240) and 3,650 crystals (total cost of $803), and paid for 2,880 actual direct labor hours (cost of $42,480).

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.
3. Identify a possible cause of eachvariance.

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