The chosen product is jawbreakers from the How It's Made series.

Assume that your product uses a standard costing system and answer the following:

• How would the company go about setting standards for this product? What types of standards would be included?

• How would managers of the company use the standard costs?

• Assume the company reported the following variances in the most recent period. Can you think of a scenario that would explain each combination of variances?

  • Unfavorable direct materials price variance, favorable direct materials usage variance, and unfavorable direct materials spending variance.

  • Favorable direct labor rate variance, unfavorable direct labor efficiency variance, and unfavorable direct labor spending variance.

  • Unfavorable direct labor efficiency variance and unfavorable variable overhead efficiency variance.