SmartSound manufactures headphone cases. During September 2011, the company produced and sold 105,000 cases and recorded the following cost data:

Requirements

R1. Compute the price and efficiency variances for direct materials and direct labor.

R2. For manufacturing overhead, compute the total variance, the flexible budget variance, and the production volume variance.

R3. Prepare a standard cost income statement through gross profit to report all variances to management. The sale price of the headset cases was $1.50 each.

R4. SmartSounds management used more-experienced workers during September. Discuss the trade-off between the two direct labor variances.