Fixed-manufacturing overhead, variance analysis
Response to the following problem:
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 2009 are budgeted, $62,400, and actual, $63,916.
1. Compute the spending variance for fixed manufacturing overhead. Comment on the results.
2. Compute the production-volume variance for June 2009. What inferences can Esquire Clothing draw from this variance?