RadianceClothing 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). Variable manufacturing overhead cost is allocated to each suit on the basis of budgeted direct manufacturing labor-hours per suit. For June2020,each suit is budgeted to take3labor-hours. Budgeted variable manufacturing overhead cost per labor-hour is$12.The budgeted number of suits to be manufactured in June2020is1,080. Actual variable manufacturing overhead costs in June2020were$51,520for1,040suits started and completed. There were no beginning or ending inventories of suits. Actual direct manufacturing labor-hours for June were4,480. equirement 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× AllocatedIncurredBudgeted RateFlexible BudgetOverhead

The objective of the question is to calculate the flexible-budget variance, the spending variance,…

Answered: Radiance Clothing is a manufacturer of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Radiance

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).

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

labor-hours. Budgeted variable manufacturing overhead cost per labor-hour is

$12.

The budgeted number of suits to be manufactured in June

2020

1,080.

Actual variable manufacturing overhead costs in June

2020

were

$51,520

for

1,040

suits started and completed. There were no beginning or ending inventories of suits. Actual direct manufacturing labor-hours for June were

4,480.

equirement 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.

Incurred	Budgeted Rate	Overhead
	Actual Input Qty.
Actual Costs	×	Allocated

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

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