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. Headsound's management used better quality materials during September. Discuss the trade-off between the two direct material variances.

Headsound manufactures headphone cases. During September 2016, the company produced and sold 108,000 cases and recorded the following cost data: (Click the icon to view the cost data.) Read the requirements. Requirement 1. Compute the cost and efficiency variances for direct materials and direct labor. Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC actual cost; AQ actual quantity; FOH fixed overhead; SC standard cost; SQ standard quantity.) Formula Variance Direct materials cost variance Direct labor cost variance Standard Cost Information Quantity Cost 0.15 per part Direct Materials 2 parts 9.00 per hour Direct Labor 0.02 hours Variable Manufacturing Overhead 0.02 hours 10.00 per hour Fixed Manufacturing Overhead ($29,400 for static budget volume of 98,000 units and 1,960 hours, or $15 per hour) Actual Cost Information (214,000 parts @$ $ 42,800 0.20 per part) Direct Materials $ 9.10 per hour) Direct Labor (1,660 hours @ 15,106 Variable Manufacturing Overhead 8,000