Headstart manufactures headphone cases. During September 2018, the company produced and sold 105,000 cases and recorded the following cost data: (Click the icon to view the cost data.) Read the requirements Data Table - X 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 overhead; SC = standard cost; SQ = standard quantity) Formula (AC-SC) SQ Direct materials cost variance Direct labor cost variance Variance (10100 U 3340F Standard Cost Information Quantity Cost Direct Materials 2 parts $0.15 per part Direct Labor 0.02 hours 7.00 per hour Variable Manufacturing Overhead 0.02 hours 9 per hour Fixed Manufacturing Overhead ($30,400 for static budget volume of 95,000 units and 1,900 hours, or $16 per hour) Next compute the efficiency variances. Select the required formulas, compute the efficiency variances for direct materials and direct labor, and identify whether ead FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) Actual Cost Information Direct Materials $ 41,600 Formula Variance Direct materials efficiency variance = (AQ - SQ) X AC 300|| F 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 AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity; VOH = variable overhead.) (208,000 parts @ $0.20 per part) (1,600 hours @ $7.10 per hour) Direct Labor 11,360 8,000 Variable Manufacturing Overhead Fixed Manufacturing Overhead 25,000 Formula Variance Print Done VOH cost variance VOH efficiency variance Formula VOH cost variance Variable Manufacturing Overhead 0.02 hours 9 per hour Fixed Manufacturing Overhead ($30,400 for static budget volume of 95,000 units and 1,900 hours, or $16 per hour) VOH efficiency variance Actual Cost Information Direct Materials Now compute the fixed overhead cost and volume variances. Select the required formulas, compute the fixed overhead cost and volume variances, and identify wh quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) Formula Variance FOH cost variance Actual FOH - Budgeted FOH 5,400 FOH volume variance Budgeted FOH - Allocated FOH 8,000|| F (208,000 parts @ $0.20 per part) (1,600 hours @ $7.10 per hour) $ 41,600 11,360 Direct Labor F 8,000 Variable Manufacturing Overhead Fixed Manufacturing Overhead 25,000 Requirement 3. Headstart's management used better quality materials during September. Discuss the trade-off between the two direct material variances. Print Done They hoped these materials Headstart's management knew that using higher quality materials would result in a(n) favorable direct material efficiency variance favorable direct material cost variance
