Grand Clothing is a manufacturer of designer suits. The cost of each suit is the sum of three variable costs (direct materials costs, direct manufacturing labour costs, and manufacturing overhead costs) and one fixed-cost category (manufacturing overhead costs). VMOH cost is allocated to each suit based on budgeted direct manufacturing labour-hours (DMLH) per suit. For June 2018, each suit is budgeted to take 4 labour-hours. Budgeted VMOH costs per labour-hour are $12.00. The budgeted number of suits to be manufactured in June 2018 is 1,060 and the actual number of suits started and completed is 1,120. Grand Clothing allocates FMOH to each suit using budgeted (DMLH) per suit. Data pertaining to (FMHO) for June 2018 are $72,080 budgeted and $63,920 actual. Required Begin by computing the following amounts for the FMOH. Same Budgeted Lump Sum Regardless of Output Level Flexible Budget: Same Budgeted Lump Sum Regardless of Output Level Actual Costs Allocated Incurred Overhead Requirement 1. Calculate the rate variance for FMOH. Comment on these results. Now calculate the rate variance. Label the variance as favourable (F) or unfavourable (U). Rate variance Comment on these results. The fixed manufacturing overhead rate variance and the fixed manufacturing flexible-budget variance are Grand spent the budgeted amount for June 2018. Requirement 2. Calculate the production-volume variance for June 2018. What inferences can Grand Clothing draw from this variance? Calculate the production-volume variance. Label the variance as favourable (F) or unfavourable (U). Production-volume variance What inferences can Grand Clothing draw from this variance? The production-volume variance arises because the actual production of suits is than the budgeted production. This results in type of production-volume variance: Is the market V? Is Grand V market share? Will Grand need to fixed manufacturing overhead. Grand Clothing may want to consider following for this Requirement 3. Calculate the over- or underallocated FMOH. What does this tell the management about June's performance? variances, there is a limited amount of inference that can be drawn from the variance. Given that variances are relatively The fixed manufacturing overhead is by $ Since this figure is a combination of when compared to the original budget ($72,080), management should probably this variance