Question 3:

Stafford Clothing is a manufacturer of designer suits. The cost of each suit is the sum of three variable costs (direct material costs, direct manufacturing labour costs, and manufacturing overhead costs), and one fixed-cost category (manufacturing overhead costs).Variable manufacturing overhead cost is allocated to each suit based on budgeted direct manufacturing labour-hours per suit.

For June 2019, each suit is budgeted to take 4.5 labour-hours. Budgeted variable manufacturing overhead cost per labour-hour is $11. The budgeted number of suits to be manufactured in June 2019 is 1 400.

Actual variable manufacturing overhead costs in June 2019 for 1 280 suits started, and completed, were $51,750. There was no beginning or ending inventories of suits. Actual direct manufacturing labour-hours for June were 4 500.

Required

1. Calculate the flexible-budget variance, the spending variance, and the efficiency variance for variable manufacturing overhead.
2. Comment on the results.