Compute the direct cost variances.

Question

1. The price variance for materials is the difference between the actual quantity of materials at the standard price and the standard quantity of materials at the standard price. A. True B. False 2. Standards are determined after the accounting period has ended, so comparisons can be made between standard costs (budgeted costs) and actual total costs and actual unit costs. A. True B. False

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Question

Chapter 17, Problem 19E

To determine

Compute the direct cost variances.

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1. The price variance for materials is the difference between the actual quantity of materials at the standard price and the standard quantity of materials at the standard price. A. True B. False 2. Standards are determined after the accounting period has ended, so comparisons can be made between standard costs (budgeted costs) and actual total costs and actual unit costs. A. True B. False

Deluxe, Inc. produced 1,000 units of the company's product in 2018. The standard quantity of direct materials was three yards of cloth per unit at a standard cost of $1.05 per yard. The accounting records showed that 2,600 yards of cloth were used and the company paid $1.10 per yard. Standard time was two direct labor hours per unit at a standard rate of $10.75 per direct labor hour. Employees worked 1,400 hours and were paid $10.25 per hour. Read the requirements. Requirement 1. What are the benefits of setting cost standards? Standard costing helps managers do the following: 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…

Which of the following factor may not be included in the computation of the total materials variance? Group of choices: Number of hours Quantity purchased Quantity sold Actual price