Tailored Clothing is a manufacturer of designer suits. The cost of each suit is the sum of three variable costs $($direct material costs, direct manufacturing labor costs, and manufacturing

overhead costs$)$ and one fixed$-$cost category $($manufacturing overhead costs$).$

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Read the requirements. Tailored Clothing is a manufacturer of designer suits. The cost of each suit is the sum of three variable costs $($direct material costs, direct manufacturing labor costs, and manufacturing

overhead costs$)$ and one fixed$-$cost category $($manufacturing overhead costs$).$

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Read the requirements.

Requirement $1.$ Compute the flexible$-$budget variance, the spending variance, and the efficiency variance for variable manufacturing overhead. Tailored Clothing is a manufacturer of designer suits. The cost of each suit is the sum of three variable costs $($direct material costs, direct manufacturing labor costs, and manufacturing

overhead costs$)$ and one fixed$-$cost category $($manufacturing overhead costs$).$

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Read the requirements.

Requirement $1.$ Compute the flexible$-$budget variance, the spending variance, and the efficiency variance for variable manufacturing overhead.

Begin by computing the following amounts for the variable manufacturing overhead.

Actual Input Qty$.$

Now compute the variances: flexible$-$budget variance, then spending variance, and finally the efficiency variance. Label each variance as favorable $($F$)$ or unfavorable $($U$).$

Flexible$-$budget variance

Spending variance

Efficiency variance

Requirement $2.$ Comment on the results.

Tailored had

spending variance because the actual variable overhead rate per direct manufacturing labor$-$hour was

than the budgeted. It had

efficiency

variance because each suit averaged

labor$-$hours than budgeted.