Concept explainers
Variable manufacturing
Direct manufacturing labor use | 0.02 hours per baguette |
Variable manufacturing overhead | $10.00 per direct manufacturing labor-hour |
The Sourdough Bread Company provides the following additional data for the year ended December 31, 2017:
Planned (budgeted) output | 3,100,000 baguettes |
Actual production | 2,600,000 baguettes |
Direct manufacturing labor | 46,800 hours |
Actual variable manufacturing overhead | $617,760 |
- A. What is the denominator level used for allocating variable manufacturing overhead? (That is, for how many direct manufacturing labor-hours is Sourdough Bread budgeting?)
Required
- B. Prepare a variance analysis of variable manufacturing overhead. Use Figure 8-4 (page 304) for reference.
- C. Discuss the variances you have calculated and give possible explanations for them.
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