Smart Sets manufactures headphone cases. During September 2016, 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. Smart Sets€™s management used better-quality materials during September. Discuss the trade-off between the two direct material variances.

Standard Cost Information Quantity 2 parts 0.02 hours Cost $ 0.15 per part 8.00 per hour Direct Materials Direct Labor Variable Manufacturing Overhead 0.02 hours 9.00 per hour Fixed Manufacturing Overhead ($31,360 for static budget volume of 98,000 units and 1,960 hours, or $16 per hour) Actual Information Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead (214,000 parts$0.20 per part) 42,800 (1,660 hours $8.10 per hour) 13,446 14,000 26,000