P$-$M:$6-27$A Computing standard cost variances and reporting to management

Hear Smart manufactures headphone cases. During September $2024,$ the company produced and sold $105,000$ cases and recorded the following cost data:

Standard Cost Information

Quantity

Cost

Direct Materials

$2$ parts

$ $0\mathrm{.}15$ per part

Direct Labor

$0\mathrm{.}02$ hours

$10\mathrm{.}00$ per hour

Variable Manufacturing Overhead

$0\mathrm{.}02$ hours

$8\mathrm{.}00$ per hour

Fixed Manufacturing Overhead $($$$28,500$ for static budget volume of $95,000$ units and $1,900$ hours, or $$15$ per hour$)$

Actual Cost Information

Direct Materials

$(209,000$ parts @ $$0\mathrm{.}20$ per part$)$

$ $41,800$

Direct Labor

$(1,600$ hours $$ $$10\mathrm{.}10$ per hour$)$

$14,924$

Variable Manufacturing Overhead

$9,000$

Fixed Manufacturing Overhead

$26,000$

$6\mathrm{.}2-72$ Full Alternative Text E

$6\mathrm{.}2-73$ Full Alternative Text L

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.

$3.$ Hear Smart's management used better quality materials during September. Discuss the trade$-$off between the two direct material variances.