8 22 fixed manufacturing overhead variance analysis

8-22 Fixed manufacturing overhead, variance analysis (continuation of 8-21). 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 2017 are budgeted, $62,400, and actual, $63,916.
Required:
1. Compute the spending variance for fixed manufacturing overhead. Comment on the results.
2. Compute the production-volume variance for June 2017. What inferences can Esquire
Clothing draw from this variance?
SOLUTION
8- °

8-28 Straightforward coverage of manufacturing overhead, standard-costing system. The
Brazil division of an American telecommunications company uses standard costing for its
machine-paced production of telephone equipment. Data regarding production during June are as
follows:
Variable manufacturing overhead costs incurred $537,470
Variable manufacturing overhead cost rate $7 per standard machine-hour
Fixed manufacturing overhead costs incurred $146,101
Fixed manufacturing overhead costs budgeted $136,000
Denominator level in machine-hours 68,000
Standard machine-hour allowed per unit of output 1.2
Units of output 66,500
Actual machine-hours used 75,700