Question

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 $1.10 per yard. The accounting records showed that 2,800 yards of cloth were used and the company paid $1.15 per yard. Standard time was two direct labor hours per unit at a standard rate of $11.25 perc as two direct labor hours per unit at a standard rate of $11.25 per direct labor hour. Employees worked 1,800 hours and were paid $10.75 per hour. Read the requirements. Requirement 1. What are the benefits of setting cost standards? A Requirements Standard costing helps managers do the following: Prepare the master budget Decrease accounting costs 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. Print Done

Answer 1

Treat what are the benefits of selting cost stondoads. Ans: for flexible Preparing the master budget setting target levels of performance budgets Identifying Performance standards Setting sales price of products Decreasing accounting cost Rea 2 material cost variance: = (AC-56] x AO ($1.1551.10] x 2800 yang = [005] x 2800 = 61400 - material Efficiency variance = (A a so) X .Sc - (2800 - 3000 x $1.10 - $ 220 F [so= 1000 unit x 3 PU= 3000 Lobor cost variance = CAC- SC) x pre = CELO75- $11.25] x 1 900 F AH 1800 Hous - Labor efficiency variance CAO-SQ) X SA SR (1800 HOUS-2000] x 5 11.25 Is 2250 F (SH 1000 unit x 2D.L HOU PO = 2000