Opulence Clothing is a manufacturer of designer suits. For June 2014, each suit is budgeted to take 5 labor-hours. The budgeted number of suits to be…

Opulence Clothing is a manufacturer of designer suits. For June 2014, each suit is budgeted to take 5 labor-hours.  The budgeted number of suits to be manufactured in June 2014 is 1,1160.  Opulence 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 2014 are budgeted, $87,000.00 and actual, $63,935.  In June, 2014 there were 1,180 suits started and completed.  There were no beginning or ending inventories of suits.

  1. Compute the spending variance for fixed manufacturing overhad. Comment on the results.
  2. Compute the production-volume variance for June 2014. What inferences can Opulence draw from this variance?