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Smartsets manufactures headphone cases. During September 2018, the company produced and sold 106,000 cases and recorded the following cost data: (Click the icon to
Smartsets manufactures headphone cases. During September 2018, the company produced and sold 106,000 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.) Direct materials cost variance Direct labor cost variance Requirements 1. 2. 3. = Formula = = Variance Data table Standard Cost Information Quantity Cost Direct Materials Direct Labor Variable Manufacturing Overhead 2 parts 0.02 hours 0.02 hours $0.17 per part 8.00 per hour 11 per hour Compute the cost and efficiency variances for direct materials and direct labor. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances. Smartsets's management used better quality materials during September. Discuss the trade-off between the two direct material variances. Print Done Fixed Manufacturing Overhead ($30,720 for static budget volume of 96,000 units and 1,920 hours, or $16 per hour) Actual Cost Information Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead (208,000 parts @ $0.22 per part) $ 45,760 (1,620 hours @ $8.10 per hour) 13,122 15,000 28,000
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