Headsound manufactures headphone cases. During September 2018, the company produced and sold 107,000 cases and recorded the following cost data: EEB (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 cost; AQ actual quantity; FOH fixed overhead; SC standard cost; SQ = standard quantity.) actual Formula Variance Direct materials cost variance Direct labor cost variance 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 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 (Abbreviations used: AC actual cost; AQ actual quantity; FOH = fixed overhead; SC standard cost; SQ standard quantity; VOH variable overhead.) favorable (F) or unfavorable (U) 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.) Requirement 3. Headsound's management used better quality materials during September. Discuss the trade-off between the two direct material variances. They hoped these materials would result in more efficient usage than "standard" materials Headsound's management knew that using higher quality materials would result in a(n) The result was an overall JunuarUrcosTm o aom Quantity Cost 0.15 per part Direct Materials 2 parts Direct Labor 0.02 hours 7.00 per hour Variable Manufacturing Overhead 0.02 hours 10.00 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 0.20 per part) (211,000 parts @ 42,200 Direct Materials $ 7.15 per hour) 11,726 Direct Labor (1,640 hours@ Variable Manufacturing Overhead 11,000 Fixed Manufacturing Overhead 28,000
