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SmartSound manufactures headphone cases. During September 2018, the company produced and sold 107,000 cases and recorded the following cost data: Click the icon to view
SmartSound manufactures headphone cases. During September 2018, the company produced and sold 107,000 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.) Formula Variance Direct materials cost variance Direct labor cost variance = N A ctual.cuantitv FOH fixed overhead S anderd cost: SQ standard quan nces for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC actual 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. favorable (F) or unfavorable (U). (Abbreviations 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 used: AC actual cost: AC = actual quantity; FOH fixed overhead; SC standard cost; SQ = standard quantity; VOH variable overhead.) Formula Variance VOH cost variance VOH efficiency variance ixed overhead cost and volume variances, and identify whether each variance is favorable (F) or unfavorable (U), (Abbreviations used: AC ctual cost AQactual quantity: FOH= fixed overhead: SC = standard.cost SQ = standard cuantity) Formula Variance FOH cost variance FOH volume variance Requirement 3. SmartSound'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. The result was SmartSound's management knew that using higher quality materials would result in a(n) an overall Data Table Standard Cost Information Quantity Cost 0.15 per part Direct Materials 2 parts Direct Labor 0.02 hours 7.00 per hour 0.02 hours Variable Manufacturing Overhead 11.00 per hour Fixed Manufacturing Overhead ($31,040 for static budget volume of 97,000 units and 1,940 hours, or $16 per hour) Actual Cost Information 0.20 per part) $42,200 Direct Materials (211,000 parts @ $ $ 7.10 per hour) Direct Labor (1,640 hours @ 11,644 Variable Manufacturing Overhead 8,000 Fixed Manufacturing Overhead 31,000 Print Done
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