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). (Click the icon to view additional information.) Read the requirements. 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. Actual Costs Incurred x Budgeted Rate Flexible Budget Allocated Overhead 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 $10. The budgeted number of suits to be manufactured in June 2020 is 1,140. Actual variable manufacturing overhead costs in June 2020 were $40,860 for 1,160 suits started and completed. There were no beginning or ending inventories of suits. Actual direct manufacturing labor-hours for June were 4,540. Print Done
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). (Click the icon to view additional information.) Read the requirements. 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. Actual Costs Incurred x Budgeted Rate Flexible Budget Allocated Overhead 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 $10. The budgeted number of suits to be manufactured in June 2020 is 1,140. Actual variable manufacturing overhead costs in June 2020 were $40,860 for 1,160 suits started and completed. There were no beginning or ending inventories of suits. Actual direct manufacturing labor-hours for June were 4,540. Print Done
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text: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).
(Click the icon to view additional information.)
Read the requirements.
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.
Actual Costs
Incurred
x
Budgeted Rate
Flexible Budget
Allocated
Overhead
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 $10. The budgeted number of suits to be manufactured in June
2020 is 1,140.
Actual variable manufacturing overhead costs in June 2020 were $40,860 for 1,160
suits started and completed. There were no beginning or ending inventories of suits.
Actual direct manufacturing labor-hours for June were 4,540.
Print
Done
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