Luxury Clothing is a manufacturer of designer suits. For June 2020, each suit is budgeted to take 5 labor-hours. The budgeted number of suits to be manufactured in June 2020 is 1,160. Luxury 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 2020 are budgeted, $98,600, and actual, $63,910. In June 2020 there were 1,180 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 2020. What inferences can Luxury 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 Incurred Output Level Output Level $ 63,920 $ 86,400 $ 86,400'$ Allocated Overhead 91,200 Now compute the spending variance. Label the variance as favorable (F) or unfavorable (U). Spending variance $ 22,480 F Comment on the results. The fixed manufacturing overhead spending variance and the fixed manufacturing flexible budget variance are the same. Regal spent below the budgeted amount for June 2020. Requirement 2. Compute the production-volume variance for June 2020. What inferences can Regal Clothing draw from this variance? Compute the production-volume variance. Label the variance as favorable (F) or unfavorable (U). Production-volume variance $ 4,800 F What inferences can Regal Clothing draw from this variance? The production-volume variance arises because the actual production of suits is more than the budgeted production. This results in overallocated fixed manufacturing overhead. Regal Clothing may want to consider the following for this type of production-volume variance. Is the market growing? Is Regal losing market share? Will Regal need to add capacity