Esquire Clothing is a manufacturer of designer suits. For June 2020, each suit is budgeted to take 4 labor-hours. The budgeted number of suits to be manufactured in June 2020 is 1,140. 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 2020 are budgeted, $72,960, and actual, $63,915. In June 2020 there were 1,160 suits started and completed. There were no beginning or ending inventories of suits. Requirements 1. Compute the spending variance for fixed manufacturing overhead. Comment on the results. 2. Compute the production-volume variance for June 2020. What inferences can Esquire Clothing draw from this variance? Requirement 1. Compute the spending variance for fixed manufacturing overhead. Comment on the results. Begin by computing the following amounts for the fixed manufacturing overhead. Actual Costs Incurred Same Budgeted Lump Sum Regardless of Output Level Flexible Budget: Same Budgeted Lump Sum Regardless of Output Level Allocated Overhead

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Esquire Clothing is a manufacturer of designer suits. For June 2020, each suit is budgeted to take 4 labor-hours. The budgeted number of suits to be manufactured in June 2020 is 1,140. 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 2020 are budgeted, $72,960, and actual, $63,915. In
June 2020 there were 1,160 suits started and completed. There were no beginning or ending inventories of suits.
Requirements
1. Compute the spending variance for fixed manufacturing overhead. Comment on the results.
2. Compute the production-volume variance for June 2020. What inferences can Esquire Clothing draw from this variance?
Requirement 1. Compute the spending variance for fixed manufacturing overhead. Comment on the results.
Begin by computing the following amounts for the fixed manufacturing overhead.
Actual Costs
Incurred
Same Budgeted
Lump Sum
Regardless of
Output Level
Flexible Budget:
Same Budgeted
Lump Sum
Regardless of
Output Level
Allocated
Overhead
Transcribed Image Text:Esquire Clothing is a manufacturer of designer suits. For June 2020, each suit is budgeted to take 4 labor-hours. The budgeted number of suits to be manufactured in June 2020 is 1,140. 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 2020 are budgeted, $72,960, and actual, $63,915. In June 2020 there were 1,160 suits started and completed. There were no beginning or ending inventories of suits. Requirements 1. Compute the spending variance for fixed manufacturing overhead. Comment on the results. 2. Compute the production-volume variance for June 2020. What inferences can Esquire Clothing draw from this variance? Requirement 1. Compute the spending variance for fixed manufacturing overhead. Comment on the results. Begin by computing the following amounts for the fixed manufacturing overhead. Actual Costs Incurred Same Budgeted Lump Sum Regardless of Output Level Flexible Budget: Same Budgeted Lump Sum Regardless of Output Level Allocated Overhead
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