Flexible Budgets - Overhead Cost Variances Case Studies with solutions

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Variable Overhead Variance Case StudyEsquire Clothing is a manufacturer of designer suits. The cost of each suit isthe sum of three variable costs (direct material costs, direct manufacturinglabor costs, and manufacturing overhead costs) and one fixed-cost category(manufacturing overhead costs). Variable manufacturing overhead cost isallocated to each suit on the basis of budgeted direct manufacturing labor-hours per suit. The following data is available:Budgeted labor hours per suit….4 hoursBudgeted variable manufacturing overhead per labor-hour…..$12.00Budgeted number of suits to be manufactured……..1,040Actual variable manufacturing costs……$52,164Actual number of suits manufactured….1,080Actual direct manufacturing labor hours………….4,536There were no beginning or ending inventories of suits.Required:1.Compute the flexible-budget variance, the spending variance, and theefficiency variance for variable manufacturing overhead.2.Comment on the results.
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Term
Spring
Professor
Schroeder,R
Tags
Variance, Esquire Clothing, 15 00, 12 00 1 040

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