First and foremost, because the AX-360 headset is connected with  the optical port on the Xbox 360 for Dolby Digital sound, we need to make it so  we can hear people talking. If you go into your voice settings, by pushing  the Xbox button in the middle of the controller, select Personal Settings from  the menu, then select Voice from the options. There are two things that we want  to make sure of, first that the voice output is set to 10, and second that the  voice output is set to “play through speakers”. 
        So now that our Xbox 360 is properly setup to allow voice  chat through the AX-360 headset, lets focus on sound. By default most games are  set to the maximum output for sound, every game and every person will have  different settings when adjusting the in game volume for games. This link will  show you how we like a few games to sound. We can give you an idea of good  volumes to set your games to and then you can adjust it to your liking.
        Basically what we are doing here is making it so that the  default maximum output for our game isn’t overpowering our voice chat. This is  in no way making the volume lower overall or degrading the sound at all, it is  only making it so we can hear other players and that bullet whizzing by at the  same time. Once you get the game sound and the voice where you like it, use the  AX-360 control box and the Front, Center and Rear inline controls to adjust the  volume to your liking. 
        The in game volume setting will be saved for each game to the Xbox hard drive, so you  won’t have to worry about setting this up every time. If you think that doing  this will not make the game loud enough for you try it out for yourself. I  think you will be pleasantly surprised to see that you will be able to hear  crystal clear Dolby Digital sound and hear your buddies, without bothering  anyone else in the room, in the next room, or even down the street like most  surround sound systems.