Luxury Clothing is a manufacturer of designer suits. For June $2020,$ each suit is budgeted to take $3$ labor$-$hours. The budgeted numb $1,080.$ Luxury Clothing allocates fixed manufacturing overhead to each suit using budgeted direct manufacturing labor$-$hours per suit overhe$$d costs for June $2020$ are budgeted, $$55,080,$ and actual, $$63,915.$ In June $2020$ there were $1,100$ suits started and complet inventories of suits.

Requirements

Compute the spending variance for fixed manufacturing overhead. Comment on the results.

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.

$\backslash$table$[[,\backslash$table$[[$Same Budgeted$],[$Lump Sum$],[$Regardless of$],[$Output Level$]],\backslash$table$[[$Flexible Budget:$],[$Same Budgeted$],[$Lump Sum$],[$Regardless of$],[$Output Level$]],\backslash$table$[[$Allocated$],[$Overhead$]],],[$$$,63,915$$$,55,{080}^{TT}$$$,55,080$ $ $$,56,100]]$

Now compute the spending variance. Label the variance as favorable $(F)$ or unfavorable $($U$).$

Spending variance $$