Question

Please answer all the following parts. Thanks.

Smartsets manufactures headphone cases. During September 2018, the company produced and sold 107,000 mes and recorded the following costdata: 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 AC actual cost: AQ actual quantity: FOHfed overhead: SC standard cost: S tandard quantity) Abbreviations used Formula Direct materials cost variance Direct labor cost variance Next compute the efficiency variances Select the required formulas, compute the efficiency variances for direct materials and directibor and identify whether each variance is favorable For unfavorable (U) (Abbreviations used: AC actual cost AQ actual quantity: FOH foed Overhead: SC standard cost standard quantity) Fomula Direct materials efficiency variance Direct labor efficiency variance Choose from any list or enter any number in the input fields and then continue to the next question

Answer 1

Part 1

		Formula		Variance
Direct materials cost variance	=	(AC- SC)×AQ	=	$10450	U
Direct labor cost variance	=	(AC- SC)×AQ	=	$164	U

Direct materials cost variance= (0.21-0.16)*209000

Direct labor cost variance = (8.10-8.00)*1640

		Formula		Variance
Direct materials efficiency variance	=	(AQ- SQ)×SC	=	$800	F
Direct labor efficiency variance	=	(AQ- SQ)×SC	=	$4000	F

Direct materials efficiency variance = (209000-(107000*2))*0.16 = -800

Direct labor efficiency variance = (1640-(107000*0.02))*8.00 = -4000

Part 2

		Formula		Variance
VOH cost variance	=	Actual VOH − (SC × AQ)	=	$5040	F
VOH efficiency variance	=	(AQ- SQ)×SC	=	$5500	F

VOH cost variance = 13000-(1640*11) = -5040

VOH efficiency variance = (1640-(107000*0.02))*11 = -5000

		Formula		Variance
FOH cost variance	=	Actual FOH − Budgeted FOH	=	$4980	F
FOH volume variance	=	Budgeted FOH − Allocated FOH	=	$3400	F

FOH cost variance = 28000-32980 = -4980

FOH volume variance = 32980-(107000*0.02*17) = -3400

Part 3

Smartset’s management knew that using higher quality materials would result in a(n) unfavorable direct material price variance. They hoped these materials would result in more efficient usage than “standard” materials. The result was an overall unfavorable direct material flexible budget variance.