Question
Radiance Clothing is a manufacturer of designer suits. The cost of each is the sum of three variable costs(direct materials costs, direct manufacturing labor costs,
Radiance Clothing is a manufacturer of designer suits. The cost of each is the sum of three variable costs(direct materials costs, direct manufacturing labor costs, and manufacturing overhead costs) and one fixed cost category (manufacturing overhead costs)
Variable manufacturing overhead cost is allocated to each suit on the basis of budgeted direct manufacturing? labor-hours per suit. For June 2017?, each suit is budgeted to take 5 ?labor-hours. Budgeted variable manufacturing overhead cost per? labor-hour is $11. The budgeted number of suits to be manufactured in June 2017 is 1,200.
Actual variable manufacturing costs in June 2017 were $51,980 1,240 suits started and completed. There were no beginning or ending inventories of suits. Actual direct manufacturing? labor-hours for June were 4,520.
1. Compute the? flexible-budget variance, the spending? variance, and the efficiency variance for variable manufacturing overhead.
2. Comment on the results.
Radiance had ( unfavorable/favorable)spending variance because the actual variable overhead rate per direct manufacturing? labor-hour was (more/less)than the budgeted. It had (unfavorable/favorable)efficiency variance because each suit averaged (more/fewer)?labor-hours than budgeted.
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