Standard Costing and Variance Analysis at John Deere

Requirements:

1. Develop standard costs for John Deere's agricultural equipment, incorporating direct materials, direct labor, and variable overhead costs.

Cost Element	Tractor ($)	Combine ($)
Direct Materials	22,000	24,000
Direct Labor	9,000	11,000
Variable Overhead	3,000	4,000

2. Calculate the labor and materials price and efficiency variances for both models based on actual and standard costs.

Product	Labor Variance ($)	Materials Variance ($)
Tractor	2,000 favorable	1,500 unfavorable
Combine	2,500 favorable	1,800 favorable

3. Perform a comprehensive performance evaluation by comparing actual costs against standard costs for production volumes.
4. Recommend operational improvements and cost control measures based on the variance analysis to enhance profitability.