Question $45$

Butterfly gloves manufactures private label winter gloves for discount stores under the discount

stores own brand names. The company has $2$ direct costs, material, and labour, and allocates

their manufacturing overhead on the basis of direct labour hours for both variable and fixed

manufacturing overheads. The following information is available for the current period.

Budgeted Information for the period

Budgeted output of gloves $,3,100,000$ pairs of gloves

Direct manufacturing labour per unit $,0\mathrm{.}02$ hours per pair of gloves

Variable manufacturing overhead per hour $$10\mathrm{.}00$ per direct labour hour

Fixed manufacturing overhead per hour $$3\mathrm{.}00$ per direct labour hour

Actual Information for the period

a$)$ Compute all variable and fixed manufacturing overhead variances.

b$)$ Determine if manufacturing overhead is under or overallocated and provide the journal

entry, assuming that the amount of difference is considered immaterial.

c$)$ Comment on your results. Discuss the variances and explain what might be causing

them?