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 $1.10 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 $11.50 per direct labor hour. Employees worked 1,600 hours and were paid $11.00 per hour. Read the requirements. Requirement 1. What are the benefits of setting cost standards? Standard costing helps managers do the following: N Requirement 2. Calculate the direct materials cost variance and the direct materials efficiency -------------------- -... ---- Choose from any list or enter any number in the input fields and then continue to the next question ? 1,600 hours and were paid $11.00 per hour. Read the requirements Create new products Decrease accounting costs Develop more efficient production methods Identify performance standards Increase production levels Increase sales volume Prepare the master budget Set sales prices of products and services Set target levels of performance for flexible budgets cost; SQ = standard quantity.) the 5. upute favol H = fi: Chonor fram lind Aantaranha in the innut fialde and th Requirement 2. Calculate the direct materials cost variance and the direct materials officiency 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 och variance is favorable (F) or unfavorable (U). Abbreviations used: AC - actual cost AD actual quantity: FOH = fixed overhead, SC standard cost: 80 - standard quantity) Formula Variance Direct materials cost variance Direct labor cost variance 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 - foed overhead; SC - standard cost; SO standard quantity) Formula Variance Direct materials officiency variance Direct labor officiency variance Choose from any list or enter any number in the input fields and then continue to the next question ances. Select the required formulas, compute the cost variances AQ = actual quantity; FOH = fixed overhead; SC = standard cos Formula Va ariance = nce (AC - SC) XAQ rmulas, compute erials and dire = fixed overhead (AC - SC) x SQ Jantity.) (AQ - SQ) X AC (AQ - SQ) x SC ciency variance Actual FOH - Allocated FOH cy variance Actual FOH - Budgeted FOH Bugeted FOH - Allocated FOH st or enter any number in the input fields and then continue to the ne 8. The standard quantity of direct materials was three yards of cloth p -yard. Standard time was two direct labor hours per unit at a standard he direct materials efficiency variance as well as the direct labor cost and ute the cost variances for direct materials and direct labor, and identify whe ad; SC = standard cost; SQ = standard quantity.) Variance is favorab F for direct materials and direct la U 2 = standard quantity.) mula Variance elds and then continue to the next question. o 45 acer