Grand Clothing is a manufacturer of designer suits. The cost of each suit is the sum of three variable costs (direct material costs, direct manufacturing labor costs, and manufacturing overhead costs) and one fixed-cost category (manufacturing overhead costs). Variable manufacturing overhead cost is allocated to each suit on the basis of budgeted direct manufacturing labor-hours per suit. For June 2013 each suit is budgeted to take 4 labor-hours. Budgeted variable manufacturing overhead cost per labor-hour is $ 14.

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The budgeted number of suits to be manufactured in June 2013 is 120

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Actual variable manufacturing costs in June 2013 were $ 67,650 for 1,000

suits started and completed. There were no beginning or ending inventories of suits. Actual direct manufacturing labor-hours for June were 4,510.

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Requirements

1.

Compute the flexible-budget variance, the spending variance, and the efficiency variance for variable manufacturing overhead.

2.

Comment on the results.

Requirement 1.

Compute the flexible-budget variance, the spending variance, and the efficiency variance for variable manufacturing overhead.

Begin by computing the following amounts for the variable manufacturing overhead.

Actual input quantity

Actual costs

x

incurred

Budgeted rate

Flexible bu