Luxury Clothing is a manufacturer of designer suits. For June each suit is budgeted to take laborhours. The budgeted numb Luxury Clothing allocates fixed manufacturing overhead to each suit using budgeted direct manufacturing laborhours per suit overhed costs for June are budgeted, $ and actual, $ In June there were suits started and complet inventories of suits.
Requirements
Compute the spending variance for fixed manufacturing overhead. Comment on the results.
Compute the productionvolume variance for June What inferences can Luxury Clothing draw from this variance?
Requirement Compute the spending variance for fixed manufacturing overhead. Comment on the results.
Begin by computing the following amounts for the fixed manufacturing overhead.
tabletableSame BudgetedLump SumRegardless ofOutput LeveltableFlexible Budget:Same BudgetedLump SumRegardless ofOutput LeveltableAllocatedOverhead$$$ $ $
Now compute the spending variance. Label the variance as favorable or unfavorable U
Spending variance
