Premium, 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 cost of $1.00 per yard. The accounting records showed that 2.400 yards of cloth were used and the company paid $1.05 per yard. Standard time was two direct labor hours per unit at a standard rate of $13.00 per direct labor hour. Employees worked 1,600 hours and were paid $12.50 per hour. X Read the requirements Requirements Requirement 1. What are the benefits of setting cost standards? Standard costing helps managers do the following: 1. What are the benefits of setting cost standards? 2. Calculate the direct materials cost variance and the direct materials efficiency variance as well as the direct labor cost and efficiency variances Direct materials cost variance Direct labor cost variance Print Done Requirement 2. Calculate the direct materials cost variance and the direct materials efficiency variance as well as the direct labor cost and efficiency variances. Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC actual cost, AQ actual quantity, FOH = fixed overhead, SC standard cost, SQ standard quantity) Formula Variance Select the required formulas, compute the efficiency variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used AC Louantibe FON fixed overhead SC a standard cost: SQ = standard quantity)
Premium, 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 cost of $1.00 per yard. The accounting records showed that 2.400 yards of cloth were used and the company paid $1.05 per yard. Standard time was two direct labor hours per unit at a standard rate of $13.00 per direct labor hour. Employees worked 1,600 hours and were paid $12.50 per hour. X Read the requirements Requirements Requirement 1. What are the benefits of setting cost standards? Standard costing helps managers do the following: 1. What are the benefits of setting cost standards? 2. Calculate the direct materials cost variance and the direct materials efficiency variance as well as the direct labor cost and efficiency variances Direct materials cost variance Direct labor cost variance Print Done Requirement 2. Calculate the direct materials cost variance and the direct materials efficiency variance as well as the direct labor cost and efficiency variances. Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC actual cost, AQ actual quantity, FOH = fixed overhead, SC standard cost, SQ standard quantity) Formula Variance Select the required formulas, compute the efficiency variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used AC Louantibe FON fixed overhead SC a standard cost: SQ = standard quantity)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
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Transcribed Image Text:Premium, 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 cost of $1.00 per yard. The accounting
records showed that 2.400 yards of cloth were used and the company paid $1.05 per yard. Standard time was two direct labor hours per unit at a standard rate of $13.00 per direct labor hour.
Employees worked 1,600 hours and were paid $12.50 per hour.
- X
Read the requirements.
Requirement 1. What are the benefits of setting cost standards?
Standard costing helps managers do the following:
Direct materials cost variance
Direct labor cost variance
Requirements
1. What are the benefits of setting cost standards?
2. Calculate the direct materials cost variance and the direct materials efficiency
variance as well as the direct labor cost and efficiency variances
Direct materials efficiency variance
Direct labor efficiency variance
Requirement 2. Calculate the direct materials cost variance and the direct materials efficiency variance as well as the direct labor cost and efficiency variances.
Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U).
(Abbreviations used: AC actual cost, AQ actual quantity, FOH = fixed overhead; SC standard cost; SQ standard quantity)
Formula
Variance
Print
Done
Select the required formulas, compute the efficiency variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U) (Abbreviations used AC
actual cost; AQ actual quantity, FOH fixed overhead, SC standard cost; SQ = standard quantity)
Formula
Variance
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