PLEASE ANSWER EVERYTHING CORRECTLY!!!

arahs first questions for you have to do with the general ideas and terminology used to evaluate variances.

Provide answers to the following questions (1)-(3).

1. Why might Sarah want to use standard costs to compare with her actual costs?

A.Management can evaluate the differences between standard costs and actual costs to focus on correcting the cost variances.

B.Standard costs allow management to motivate employees by comparing their performance to what it would be under perfect conditions.

C.Standard costs give management a cost structure for products that is applicable for the entire life of the business.

2. What are some possible drawbacks to using standard costs that Sarah might consider? Check all that apply.

Since standards never change, they do not reflect reality.

Since standards are impossible to attain, they are a distraction from the work at hand.

Standards may become stale in a dynamic manufacturing environment.

Employees may focus only on efficiency improvement and their own operations rather than considering the larger objectives of the organization.

Standards limit operating improvements because employees may be discouraged from improving beyond the standards.

3. Sarah wants to be sure she understands the basic definitions involved:

Answer the following questions by selecting the correct words.

A favorable variance occurs when the actual cost (what the product does cost) is (Greater than, the same as, or less than ) the standard cost (what the product should cost). A favorable variance is represented by a (Positive or negative) number, indicating that costs are (higher or lower) than expected.

An unfavorable variance occurs when the actual cost (what the product does cost) is (Greater than, the same as, or less than the standard cost (what the product should cost). An unfavorable variance is represented by a (Positive or negative number, indicating that costs are (higher or lower) than expected.

Direct materials

Under normal conditions, Sarah spends $8.40 per unit of materials, and it will take 3.6 units of material per pair of shoes. During July, Sole Purpose Shoe Company incurred actual direct materials costs of $60,632 for 6,890 units of direct materials in the production of 2,150 pairs of shoes.

Complete the following table, showing the direct materials variance relationships for July for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable cost variance, and a positive number for an unfavorable cost variance.

Actual Cost								Standard Cost
Actual Quantity	X	Actual Price		Actual Quantity	X	Standard Price		Standard Quantity	X	Standard Price
	X				X
	=				=				=
			Direct Materials Variance:				Direct Materials Variance:
					Total Direct Materials Variance:

Direct Labor

Under normal conditions, Sarah pays her employees $8.50 per hour, and it will take 2.8 hours of labor per pair of shoes. During August, Sole Purpose Shoe Company incurred actual direct labor costs of $66,612 for 7,320 hours of direct labor in the production of 2,100 pairs of shoes.

Complete the following table, showing the direct labor variance relationships for August for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable variance, and a positive number for an unfavorable variance.

Actual Cost								Standard Cost
Actual Hours	X	Actual Rate		Actual Hours	X	Standard Rate		Standard Hours	X	Standard Rate
	X				X
	=				=				=
			Direct Labor Variance:				Direct Labor Variance:
					Total Direct Labor Variance:

Budget performance report

Sarah has learned a lot from you over the past two months, and has compiled the following data for Sole Purpose Shoe Company for September using the techniques you taught her. She would like your help in preparing a Budget Performance Report for September. The company produced 3,500 pairs of shoes that required 12,250 units of material purchased at $8.20 per unit and 9,450 hours of labor at an hourly rate of $8.90 per hour during the month. Actual factory overhead during September was $29,400. When entering variances, use a negative number for a favorable cost variance, and a positive number for an unfavorable cost variance.

Use the data in the following table to prepare the Budget Performance Report for Sole Purpose Shoe Company for September.

Manufacturing Costs	Standard Price	Standard Quantity	Standard Cost Per Unit
Direct materials	$8.40 per unit	3.6 units per pair	$30.24
Direct labor	$8.50 per hour	2.8 hours per pair	23.80
Factory overhead	$2.80 per hour	2.8 hours per pair	7.84
Total standard cost per pair			$61.88

Sole Purpose Shoe Company

Budget Performance Report

For the Month Ended September 30

1	Manufacturing Costs	Actual Costs	Standard Cost at Actual Volume	Cost Variance - (Favorable) Unfavorable
2	Direct materials
3	Direct labor
4	Factory overhead
5	Total manufacturing costs