Lavertezzo allocates fixed manufacturing overhead to each suit using budgeted direct manufacturing labour-hours per suit. Data pertaining to fixed manufacturing overhead costs for June 2008 are budgeted, SFr 62 400, and actual, SFr 63 916.
1. Calculate the spending variance and the flexible-budget variance for fixed manufacturing overhead. Comment on these results.
2. Calculate the production-volume variance for June 2008. What inferences can Lavertezzo draw from this variance?