HeadSound manufactures headphone cases. During September 2024, the company produced and sold 106,000 cases and recorded the following costdata:

Standard Cost Information

Direct Materials 2 parts 0.17 per part

Direct Labor 0.02 hours 11.00 per hour

Variable Manufacturing Overhead 0.02 hours 14 per hour

Fixed Manufacturing Overhead ($28,800 for static budget volume of 96,000 units and 1,920 hours, or $15 per hour)

Actual Cost Information

Direct Materials (210,000 parts @ 0.22 per part) 46,200

Direct Labor (1,620 hours @ 11.10 per hour) 17,982

Variable Manufacturing Overhead 13,000

Fixed Manufacturing Overhead 28,000

Requirements

1. Compute the cost and efficiency variances for direct materials and direct labor.

Begin with the cost variances. Select the requiredformulas, compute the cost variances for direct materials and directlabor, and identify whether each variance is favorable(F) or unfavorable(U). (Abbreviations used: AC= actualcost; AQ= actualquantity; FOH= fixedoverhead; SC= standardcost; SQ= standardquantity.)

2. For manufacturingoverhead, 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 thetrade-off between the two direct material variances.