During September 2018, the company produced and sold 108,000 cases and recorded the following cost data:

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 (AC-SC) XAQ Direct labor cost variance (AC-SC) XAQ Next compute the efficiency variances. Select the required formulas, compute the efficiency 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 efficiency variance Direct labor efficiency variance Requirement 3. SoundSmart's management used better quality materials during September. Discuss the trade-off between the two direct material variances. SoundSmart's management knew that using higher quality materials would result in an) V. They hoped these materials would result in more efficient usage than "standard" materials. The result was an overall - Data table Standard Cost Information Direct Materials Direct Labor Variable Manufacturing Overhead Quantity Cost 2 parts $ 0.15 per part 0.02 hours 9.00 per hour 0.02 hours 10.00 per hour Fixed Manufacturing Overhead ($33,320 for static budget volume of 98,000 units and 1,960 hours, or $17 per hour) Actual Cost Information Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead (211,000 parts @ $ 0.20 per part) $ 42,200 (1,660 hours @ $ 9.10 per hour) 15,106 13,000 33,000 Print Done