Great, 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 $1.20 per yard. The accounting records showed that 2,400 yards of cloth were used and the company paid $1.25 per yard. Standard time was two direct labor hours per unit at a standard rate of $16.50 per direct labor hour. Employees worked 1,800 hours and were paid $15.00 per hour. Read the requirements. - X Requirements Requirement 1. What are the benefits of setting cost standards? 1. What are the benefits of setting cost standards? Standard costing helps managers do the following: 2. Calculate the direct materials cost variance and the direct materials efficiency variance as well as the direct labor cost and efficiency variances. Create new products Print Done Decrease accounting costs ect materials efficiency variance as well as the direct labor cost and efficiency variand Develop more efficient production methods 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 = Identify performance standards Variance Increase production levels 120 U = Increase sales volume -2,700 F 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.) Prepare the master budget Variance Set sales prices of products and services SC 720 F 11 11 SC -3,300 F Set target levels of performance for flexible budgetsGreat, 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 $1.20 per yard. The accounting records showed that 2,400 yards of cloth were used and the company paid $1.25 per yard. Standard time was two direct labor hours per unit at a standard rate of $16.50 per direct labor hour. Employees worked 1,800 hours and were paid $15.00 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 quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) Formula Variance Direct materials cost variance (AC - SC) x AQ 120|U 11 11 Direct labor cost variance (AC - SC) x AQ -2,700 F 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 Direct materials efficiency variance (AQ - SQ) x SC -720 F 1I Direct labor efficiency variance (AQ - SQ) x SC -3,300 F V