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Question $13$ of $30$

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$).$

i$.)($Click the icon to view additional information.$)$

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$.$

$\backslash$table$[[\backslash$table$[[$Actual Costs$],[$Incurred$]],\backslash$table$[[$Budgeted Rate$]],$Flexible Budget,$\backslash$table$[[$Allocated$],[$Overhead$]]],[,,,]]$

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.

Esquire had $$ spending variance because the actual variable overhead rate per direct More info

Variable manufacturing overhead cost is allocated to each suit on the basis of budgeted direct manufacturing labor$-$hours per suit. For June $2020,$ each suit is budgeted to take $4$ labor$-$hours. Budgeted variable manufacturing overhead cost per labor$-$hour is $$15.$ The budgeted number of suits to be manufactured in June $2020$ is $1,120.$

Actual variable manufacturing overhead costs in June $2020$ were $$72,576$ for $1,180$ suits started and completed. There were no beginning or ending inventories of suits. Actual direct manufacturing labor$-$hours for June were $4,536.$