Reference no: EM133141630

Questions -

Q1. Doily Company manufactures pillows. The 2020 operating budget was based on production of 27,000 pillows, with 0.25 machine-hours allowed per pillow. Budgeted variable overhead per hour was $35. Actual production for 2020 was 26,000 pillows using 6,45 machine-hours. Actual variable costs were $42 per machine-hour.

a. Calculate the budgeted variable overhead for 2020.

b. Calculate the variable overhead spending variance.

c. Calculate the variable overhead efficiency variance.

Q2. 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).

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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 4 labor-hours. Budgeted variable manufacturing overhead cost per labor-hour is $14. The budgeted number of suits to be manufactured in June 2020 is 1,020. Actual variable manufacturing overhead costs in June 2020 were $65,105 for 980 suits started and completed. There were no beginning or ending inventories of suits. Actual direct manufacturing labor-hours for June were 4,490.

1. Compute the flexible-budget variance, the spending variance, and the efficiency variance for variable manufacturing overhead

2. Comment on the results.