Part $2$: Standard Costs and Variances

At his monthly Bakers Association meeting, Mr$.$ Suncat recently heard a talk on Standard Costs and Variances.

Mr$.$ Suncat wondered if this would be a good approach to use at Suncat Cake Shop to help him pinpoint any

areas of discrepancy between what he thinks his costs should be and what they are.

Mr$.$ Suncat, of course, has some questions for you!

a$.$ Define standard cost.

b$.$ Define cost variance. Explain when a favorable variance will occur. Explain when an unfavorable

variance will occur.

c$.$ Define the direct materials variance and explain the two components that makeup this variance.

d$.$ Define the direct labor variance and explain the two components that makeup this variance.

e$.$ Define the total variable overhead cost variance and explain the two components that makeup this

variance.

Using the information provided by Mr$.$ Suncat, compute the following variances. Show all calculations and

label your answers clearly.