I don't understand this.

Premium, 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 $1.00 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 direci labor hours exr unit at a standard Tale of S11.25 per direct labor hour. Employees worked 1,600 hours and were paid $10.75 per hour. Read the requirements Requirement 1. What are the benefits of setting cost standards? Standard oosting helps managers do the following: Decrease accounting costs Identity performancx standards Prepare the master buiget Set sales prices of products and services Bet target levels of performance for flexible budgets Requirement 2. Calculate the direcl malerials cost variance and the direct materials eficiency variance as well as the direct labor cost and efficiency veriances Begin with the cost variances. Select the required formulas, comoute the cost variances for direct materials and direct abor, 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 Direct labor cost variance S F (AC - SC) AQ (AC - SC) SQ (AQ - SQ) * AC (AQ - SQ) * SC Actual FOH - Allocated FOH el ciency Actual FOH - Budgeted FOH for dire S Bugeted FOH - Allocated FOH Varia