The SourdoughSourdough Bread Company bakes baguettes for distribution to upscale grocery stores. The company has...
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Accounting
The
SourdoughSourdough
Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two direct-cost categories: direct materials and direct manufacturing labor. Variable manufacturing overhead is allocated to products on the basis of standard direct manufacturing labor-hours. Following is some budget data for the
SourdoughSourdough
Bread Company:
Direct manufacturing labor use
0.02
hours per baguette
Variable manufacturing overhead
$10.00
per direct manufacturing labor-hour
The
SourdoughSourdough
Bread Company provides the following additional data for the year ended December 31,
20172017:
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
1.
What is the denominator level used for allocating variable manufacturingoverhead? (That is, for how many direct manufacturing labor-hours is
SourdoughSourdough
Bread budgeting?)
2.
Prepare a variance analysis of variable manufacturing overhead.
3.
Discuss the variances you have calculated and give possible explanations for them.
Answer & Explanation
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