You have been assigned for a Customer Due Diligence (CDD), more specifically, for reviewing the actual and budgeted figures of variable manufacturing overhead ofNowheresville Pty Ltd., a manufacturer of umbrellas. Jules De Martino is concerned whether this potential corporate customer is sticking to its variable manufacturing overhead budget or not. The analysis is for a specific month of the year, comparing the budgeted and actual figures.

The variable manufacturing overhead cost is allocated to each umbrella based on budgeted direct manufacturing labour-hours per umbrella. For the specific month of the year, each umbrella is budgeted to take 4 labour-hours. Budgeted variable manufacturing overhead cost per labour-hour is $18. The budgeted number of umbrellas to be manufactured in this given month is 300.

Actual variable manufacturing overhead costs in the given month were $20,000 for 280 umbrellas started and completed. There was no opening or closing stock of umbrellas. Actual direct manufacturing labour-hours for this given month were 1,200.

Required

1. a)Calculate the static-budget variance, the flexible-budget variance, and the sales-volume variance for variable manufacturing overhead.(e.g., Exercise 16.11, Chapter 16,5 marks)
2. b)Based on the above answer, comment on whetherNowheresville Pty Ltd.is sticking to its variable manufacturing overhead budget or not.(e.g., Exercise 16.11, Chapter 16,10 marks)
3. c)Calculate the spending and efficiency variances for the given month and identify what has caused the flexible-budget variance forNowheresville Pty Ltd.(e.g., Exercise 16.11, Chapter 16,5 marks)