HeadSound manufactures headphone cases. During September 2018, the company produced and sold 107,000 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 = ite the efficiency variances for direct F) or unfavorable (U). (Abbreviations used: rd cost; SQ = standard quantity.) (AC-SC) x AQ Next compute the efficiency variances materials and direct labor, and identify (AC - SC)SQ AC = actual cost; AQ = actual quantity (AQ - SQ) X AC (AQ - SQ) x SC Actual FOH - Allocated FOH Direct materials efficiency variance Actual FOH - Budgeted FOH Direct labor efficiency variance Budgeted FOH - Allocated FOH Variance = 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 F Next compute the efficiency variances. Select the required formulas, compute the efficiency es for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable bbreviations 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 = II Standard Cost Information Quantity Cost Direct Materials 2 parts $ 0.17 per part 0.02 hours 8.00 per hour Direct Labor Variable Manufacturing Overhead 0.02 hours 9.00 per hour Fixed Manufacturing Overhead ($32,980 for static budget volume of 97,000 units and 1,940 hours, or $17 per hour) Actual Cost Information Direct Materials $ 46,860 (213,000 parts @ $ (1,640 hours @ $ 0.22 per part) 8.15 per hour) Direct Labor 13,366 11,000 Variable Manufacturing Overhead Fixed Manufacturing Overhead 30,000 Requirement 2. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances. Now compute the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, 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; VOH = variable overhead.) Formula Variance VOH cost variance VOH efficiency variance Now compute the fixed overhead cost and volume variances. Select the required formulas, compute the fixed overhead cost and volume variances, 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 FOH cost variance = FOH volume variance Requirement 3. HeadSound's management used better quality materials during September. Discuss the trade-off between the two direct material variances. HeadSound's management knew that using higher quality materials would result in a(n) . They hoped these materials would result in more efficient usage than "standard" materials. The result was an overall a Variance Il favorable direct material cost variance II favorable direct material efficiency variance unfavorable direct material cost variance r quality materials during September. Discuss the trade-off unfavorable direct material efficiency variance q-..ity materials would result in a(n) V. They hoped these materials would result in more efficient usage than "standard" materials. The result was an overall