Best, Inc. produced 1,000 units of the company's product in 2024. The standard quantity of direct materials was three yards of cloth per unit at a standard cos of $1.40 per yard. The accounting records showed that 2,700 yards of cloth were used and the company paid $1.45 per yard. Standard time was two direct abor hours per unit at a standard rate of $14.50 per direct labor hour. Employees worked 1,600 hours and were paid $13.50 per hour. Read the requirements. Decrease accounting costs Set sales prices of products and services Requirement 2. Calculate the direct materials cost variance and the direct materials efficiency variance as well as the direct labor cost and efficiency wariances. Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each pblo (F) or unfavorable (LD) (Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ =

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Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance. 

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.