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 2014, each suit is budgeted to take 55 labor-hours. Budgeted variable manufacturing overhead cost per labor-hour is $10.

The budgeted number of suits to be manufactured in June 2014 is 1,100. Actual variable manufacturing costs in June 2014 were $43,130 for 1,160 suits started and completed. There was no beginning or ending inventories of suits. Actual direct manufacturing labor-hours for June were 4,540.

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 Qty.
Actual Costs	x		Allocated
Incurred	Budgeted Rate	Flexible Budget	Overhead