Question

E8-24 The Whole Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two​ direct-cost categories: direct materials and direct manufacturing labor. The Whole Bread Company allocates fixed manufacturing overhead to products on the basis of standard direct manufacturing​ labor-hours.

Requirements 1. Prepare a variance analysis of fixed manufacturing overhead cost. 2. Is fixed overhead underallocated or​ overallocated? By what​ amount? 3. Comment on your results. Discuss the variances and explain what may be driving them.

The following is some budget data for the Whole Bread Company for 2017 and additional infomation for the year ended Decmeber​ 31, 2017​:

Direct manufacturing labor use 0.02 hours per baguette Fixed manufacturing overhead $5.00 per direct manufacturing labor-hour Data Table Planned (budgeted) output 2,800,000 baguettes Actual production 2,700,000 baguettes Budgeted direct manufacturing labor 56,000 hours Actual direct manufacturing labor 48,500 hours Actual fixed manufacturing overhead $284,000 Direct manufacturing labor use 0.02 hours per baguette Fixed manufacturing overhead $5.00 per direct manufacturing labor-hour Same Budgeted Lump Sum Actual Costs Regardless of Flexible Allocated Incurred Output Level Budget Overhead Fixed MOH

		Same Budgeted
		Lump Sum
	Actual Costs	Regardless of	Flexible	Allocated
	Incurred	Output Level	Budget	Overhead
Fixed MOH

Planned (budgeted) output	2,800,000	baguettes
Actual production	2,700,000	baguettes
Budgeted direct manufacturing labor	56,000	hours
Actual direct manufacturing labor	48,500	hours
Actual fixed manufacturing overhead	$284,000

Answer 1