Bargain, Inc. produced 1.000 units of the company's product in 2024. The standard quandity of direct materials was three yards of cloth per unit at a standard cost of $1.10 per yard. The accounting records showed that 2,800 yards ofcioth were used and the company paid $1.15 per yard. Standard time was two direct labor hours per unit at a standard rate of $14.00 per direct labor hour. Employees worked 1,800 hours and were paid $13.50 per hour.Read the seauiementsRequirement 1. What are the benefits of setting cost standards?Standard costing helps managers do the followingPrepare the master budgetSet target levels of perfomance for fleibie budgetsdentity performance standardsSet sales prices of products and servicesDecrease accounting costsRequirement 2. Calculate the direct materials cost variance and the direct materials efficiency variance as well as the direct labor cost and efficiency variancesBegin with the cost variances. Select the required formulas, compute the cost variances for direct maberials and direct labor, and idently whether each variance ia favorable (F) or unfavorable (U). (Abbreviations used ACactualcost, AQactual quantity. FOH= fced overhead, SC = standard cost Sa standard quantty.)FormulaVarianceDirect materials oost varianceRequirementsDirect labor cost variance1. What are the benefits of seting cost standards?2. Calculate the direct materials cost variance and the direct materials efficiencyvariance as well as the direct labor cost and efficiency variances.PrintDone

Solution:- Given, Bargain Inc., produced 1000 units Direct materials was three yards of cloth per…

Requirement 1. What are the benefits of setting cost standards? Standard costing helps managers do the following Prepare the master budget Set target levels of perfomance for fexibie budpets dentity performance standards Set sales prices of products and servioes Decrease accounting costs Requirement 2. Calcuate the direct materials coat variance and the direct materials effciency variance as well as the dieect 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 identily whether each variance ia favorable (F) or untavorabie (U), (Abbreviations used ACactual cost. AQactual quartiny FOH feed overthead SC standard cost sa tandard quantty) Formula Variance Direct materiais cost variance Requirements Direct labor cost variance 1. What are the benefits of setting cost standards? Calculate the direct materials cost variance and the direct materials efficiency variance as well as the direct labor cost and efficiency variances. Print Done

Requirement 1. What are the benefits of setting cost standards? Standard costing helps managers do the following Prepare the master budget Set target levels of perfomance for fexibie budpets dentity performance standards Set sales prices of products and servioes Decrease accounting costs Requirement 2. Calcuate the direct materials coat variance and the direct materials effciency variance as well as the dieect 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 identily whether each variance ia favorable (F) or untavorabie (U), (Abbreviations used ACactual cost. AQactual quartiny FOH feed overthead SC standard cost sa tandard quantty) Formula Variance Direct materiais cost variance Requirements Direct labor cost variance 1. What are the benefits of setting cost standards? Calculate the direct materials cost variance and the direct materials efficiency variance as well as the direct labor cost and efficiency variances. Print Done

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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