Answer
1. Flexible budget variance = -\$2,268 (Favorable variance)
2. Spending variance = \$2,592 (Unfavorable variance)
3. Efficiency variance = \$2,592 (Unfavorable variance)
Work Step by Step
1. Flexible Budget Variance:
Flexible budget variance = Actual variable manufacturing overhead cost - Flexible budget variable manufacturing overhead cost
Flexible budget variance = \$52,164 - (\$12/hour*4,536 hours)
Flexible budget variance = \$52,164 - \$54,432
2. Spending Variance:
Spending variance = Flexible budget variable manufacturing overhead cost - Budgeted variable manufacturing overhead cost
Spending variance = (\$12/hour * 4,536 hours) - (\$12/hour * 4 hours/suit * 1,080 suits)
Spending variance = \$54,432 - $51,840
3. Efficiency Variance:
Efficiency variance = (Actual direct manufacturing labor-hours - (Actual suits completed *Budgeted labor-hours per suit)) * Budgeted variable manufacturing overhead cost per hour
Efficiency variance = (4,536 hours - (1,080 suits * 4 hours/suit)) * \$12/hour
Efficiency variance = (4,536 hours - 4,320 hours) * \$12/hour
Efficiency variance = 216 hours * \$12/hour
