Opulence 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 1,160 and the actual number of suits started and completed is 1,200. Opulence Clothing allocates FMOH to each suit using budgeted (DMLH) per suit. Data pertaining to (FMHO) for June 2018 are $52,200 budgeted and $63,915 actual. Required - X Begin by computing the following amounts for the FMOH. Required Flexible Budget: Same Budgeted Same Budgeted 1. Calculate the rate variance for FMOH. Comment on these results. Lump Sum Lump Sum 2. Calculate the production-volume variance for June 2018. What inferences can Opulence Clothing draw from this variance? Actual Costs Regardless of Regardless of Allocated 3. Calculate the over- or underallocated FMOH. What does this tell the Incurred Output Level Output Level Overhead management about June's performance? $ 63,915 $ 52,200 $ 52,200 $ 54,000 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). Print Done Rate variance $ 11,715 U Comment on these results. The fixed manufacturing overhead rate variance and the fixed manufacturing flexible-budget variance are the same . Opulence spent above the budgeted amount for June 2018. Requirement 2. Calculate the production-volume variance for June 2018. What inferences can Opulence Clothing draw from this variance? Calculate the production-volume variance. Label the variance as favourable (F) or unfavourable (U). Production-volume variance $ 1,800 F What inferences can Opulence 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. Opulence Clothing may want to consider the following for this type of production-volume variance: Is the market growing ? Is Opulence gaining market share? Will Opulence need to add capacity Requirement 3. Calculate the over- or underallocated FMOH. What does this tell the management about June's performance? The fixed manufacturing overhead is underallocated by $ 9915 . Since this figure is a combination of two variances, there is a limited amount of inference that can be drawn from the variance. Given that variances are relatively when compared to the original budget ($52,200), management should probably this variance