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Variable manufacturing overhead cost is allocated to each suit on the basis of budgeted direct manufacturing labor-hours per suit. For June 20172017, each suit is

Variable manufacturing overhead cost is allocated to each suit on the basis of budgeted direct manufacturing labor-hours per suit. For June

20172017,

each suit is budgeted to take

44

labor-hours. Budgeted variable manufacturing overhead cost per labor-hour is

$ 11$11.

The budgeted number of suits to be manufactured in June

20172017

is

1 comma 0401,040.

Actual variable manufacturing costs in June

20172017

were

$ 45 comma 700$45,700

for

1 comma 0601,060

suits started and completed. There were no beginning or ending inventories of suits. Actual direct manufacturing labor-hours for June were

4 comma 5704,570.

RegalRegal

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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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.

Actual Costs

x

Allocated

Incurred

Budgeted Rate

Flexible Budget

Overhead

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