We made rainbow crayons.
Step 1: Pick out all the bits of broken crayons for your crayon jar (I know you have one!). This is a simple task that even a toddler can handle. It's about digging and selecting and little ones are good at that.
Step 2: Line a muffin tin with paper cups (or don't, but this will be easier if you do).
Step 3: Peel the bits of broken crayon and place the pieces willy nilly in the muffin tin cups. (If you like, you can organize the bits of crayon by colour. I didn't, because we were "experimenting" but you really can't go wrong, no matter what you do.
Step 5: Go off and do something else. Check on your melting crayons every 10 minutes or so.
Step 6: When you notice that the crayons have all melted, remove the muffin tin and leave it out to cool. (Or melting process took about 35 mins). If you put a lot of different colours in each cup, the tops of your melted crayons may look oily and yucky (probably greyish brown). Don't worry! Just be patient and let them cool.
They need a little more time in the oven, and the murky look is not a problem.