Question
Grand Clothing is a manufacturer of designer suits. For June 2013 each suit is budgeted to take 44 labor-hours. The budgeted number of suits to
Grand Clothing is a manufacturer of designer suits. For June 2013 each suit is budgeted to take 44 labor-hours. The budgeted number of suits to be manufactured in June 2013 is1,020. Grand Clothing allocates fixed manufacturing overhead to each suit using budgeted direct manufacturing labor-hours per suit. Data pertaining to fixed manufacturing overhead costs for June 2013 are budgeted, $61,200, and actual, $63,900 for 1,000 suits started and completed. There were no beginning or ending inventories of suits. Requirements 1. Compute the spending variance for fixed manufacturing overhead. Comment on the results. 2. Compute the production-volume variance for June 2013. What inferences can Grand Clothing draw from this variance? Requirement 1. Compute the spending variance for fixed manufacturing overhead. Comment on the results. Begin by computing the following amounts for the fixed manufacturing overhead. Flexible Budget: Same Budgeted Same Budgeted Lump Sum Lump Sum Actual Costs Regardless of Regardless of Allocated Incurred Output Level Output Level Overhead
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