SoundSmart manufactures headphone cases. During September 2014, the company produced 108,000 cases and recorded the following cost data:

Requirements
1. Compute the cost and efficiency variances for direct materials and direct labor.
2. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances.
3. SoundSmart’s management used better quality materials during September. Discuss the trade- off between the two direct materialvariances.

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Standard Cost Information Quantity 2 parts 0.02 hours Cost Direct Materials Direct Labor Variable Manufacturing Overhead 0.02 hos 11.00 per hour Fixed Manufacturing Overhead (329,400 for static budget volume of 98,000 units and 1,960 hours, or $15 per hour) 5 0.16 per part 7.00 per hour Actual Information Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead (193,000 parts$0.21 per part 40,530 12,584 12,000 30,000 (1,760 hours $7.15 per hour