Question

Deluxe​, 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 2,800 yards of cloth were used and the company paid$1.05 per yard. Standard time was two direct labor hours per unit at a standard rate of $9.75 per direct labor hour. Employees worked1,800 hours and were paid $9.25per hour. .

1.	What are the benefits of setting cost​ standards?
2.	Calculate the direct materials cost variance and the direct materials efficiency variance as well as the direct labor cost and efficiency variances

Answer 1

Answer:

1.The benefits of setting cost standards:

Cost standards are important to think about our association's real performance. Norms are made dependent on past fiscal reports, market desires and so forth.

So by comparision , we can discover the variances and afterward by finding the purposes behind such variances we can improve our performance further. Likewise specialist individual or department can be considered accountable.

2.

Compute the Direct material variance :

Direct material variance

= standard cost - actual cost = (1,000 * 3 *$ 1.0) - (2,800*$ 1.05) = $ 3,000 - $ 2,940 = $ 60

$ 60

Compute the Direct material efficiency variance:

Direct material efficiency variance

= (Standard quantity - actual quantity) * standard price = (3,000 - 2,800)*$ 1.00 = 200*$1 = $ 2,00

$2,00

Compute the Direct labor cost variance :

Direct labor cost variance

= standard cost - actual cost = (1,000* 2hrs*$9.75)-(1,800*$9.25) = $ 19,500 - $ 16,650 = $ 2,850

$ 2,850

Compute the direct labor efficiency variance:

Direct labor efficiency variance

=(Standard hours - actual hours) * standard rate = (2,000 - 1,800)*9.75 = $ 1,950

$1,950