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