Variable Overhead Variance Case Study
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). Variable manufacturing overhead cost is
allocated to each suit on the basis of budgeted direct manufacturing labor-
hours per suit. The following data is available:
Budgeted labor hours per suit….
Budgeted variable manufacturing overhead per labor-hour…..
Budgeted number of suits to be manufactured……..
Actual variable manufacturing costs
Actual number of suits manufactured….
Actual direct manufacturing labor hours………….
There were no beginning or ending inventories of suits.
Compute the flexible-budget variance, the spending variance, and the
efficiency variance for variable manufacturing overhead.
Comment on the results.