Variable manufacturing overhead, variance analysis. Esquire 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). 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 4 labor-hours Budgeted variable manufacturing overhead cost per labor-hour is $12. The budgeted number of suits to be manufactured in June 2017 is 1, 040. Actual variable manufacturing costs in June 2017 were $52, 164 for 1, 080 suits started and completed. There were no beginning or ending inventories of suits Actual direct manufacturing labor-hours for June were 4, 536. Compute the flexible-budget variance, the spending variance, and the efficiency variance for variable manufacturing overhead. Comment on the results. Esquire Clothing allocates fixed manufacturing overhead to each suit using budgeted direct manufacturing labor-hours per suit. Data pertaining to fixed manufacturing overhead costs for June 2017 are budgeted, $62.400, and actual, $63.916. Compute the spending variance for fixed manufacturing overhead. Comment on the results. Compute the production-volume variance for June 2017. What inferences can Esquire Clothing draw from this variance? The Sourdough Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two direct-cost categories direct materials and direct manufacturing labor. Variable manufacturing overhead is allocated to products on the basis of standard direct manufacturing labor-hours. Following is some budget data for the Sourdough Bread Company Direct manufacturing labor use Variable manufacturing overhead 0.02 hours par baguette $10.00 per direct manufacturing labor-hour The Sourdough Bread Company provides the following additional data for the year ended December 31, 2017 What is the denominator level used for allocating variable manufacturing overhead? (That is, for how many direct manufacturing labor-hours is Sourdough Bread budgeting?) Prepare a variance analysis of variable manufacturing overhead. Use Exhibit 8-4 (page 304) for reference. Discuss the variances you have calculated and give possible explanations for them. The Sourdough Bread Company also allocates fixed manufacturing overhead to products on the basis of standard direct manufacturing labor-hours For 2017, fixed manufacturing overhead was budgeted at $3.00 per direct manufacturing labor-hour. Actual fixed manufacturing overhead incurred during the year was $294.000 Prepare a variance analysis of fixed manufacturing overhead cost Use Exhibit 8-4(page 304) as a guide. Is fixed overhead underallocated or overallocated? By what amount? Comment on your results. Discuss the variances and explain what may be driving them. The Rotations Corporation is a manufacturer of centrifuges. Fixed and variable manufacturing overheads are allocated to each centrifuge using budgeted assembly-hours. Budgeted assembly time is 2 hours per unit. The following table shows the budgeted amounts and actual results related to overhead for June 2017
