Flexible budgets, four-variance analysis. (CMA, adapted) Nolton Products uses a standard¬

costing system. It allocates manufacturing overhead (both variable and fixed) to products based on standard direct manufacturing labour-hours (DLH). Nolton develops its manufac¬

turing overhead rate from the current annual budget. The manufacturing overhead budget for 2007 is based on budgeted output of 720,000 units requiring 3,600,000 direct manufacturing labour-hours. The company is able to schedule production uniformly through¬

out the year.

A total of 66,000 output units requiring 315,000 direct labour-hours were produced during May 2007. Manufacturing overhead (MOH) costs incurred for May amounted to

$433,000. The actual costs as compared with the annual budget and 1/12 of the annual budget are shown below.

Annual Manufacturing Overhead Budget 2007 Per Monthly Actual Per DLH MOH MOH Total Output Input Budget Costs for Amount Unit Unit May 2007 May 2007 Variable MOH:

Indirect manufacturing labour $1,080,000 $1.50 $0,300 $ 90,000 $ 90,000 Supplies Fixed MOH:

1,476,800 2.05 0.410 123,000 133,000 Supervision 777,600 1.08 0.216 64,800 61,200 Utilities 648,000 0.90 0.180 54,000 64,800 Amortization 1,209,600 1.68 0.336 100,800 84,000 Total $5,191,200 $7.21 $1,442 $432,600 $433,000 Required Calculate the following amounts for Nolton Products for May 2007:

1. Fixed manufacturing overhead costs allocated and flexible budget for variable manufacturing overhead 2. Variable manufacturing overhead spending variance 3. Fixed manufacturing overhead spending variance 4. Variable manufacturing overhead efficiency variance 5. Production-volume variance Be sure to identify each variance as favourable (F) or unfavourable (U).