Question: French Bread Company has two direct cost categories direct materials and

French Bread Company has two direct-cost categories: direct materials and direct manufacturing labour. Variable manufacturing overhead is allocated to products on the basis of standard direct manufacturing labour-hours (DMLH).
Baguettes are baked in batches of 100 loaves. Following are some pertinent data for French Bread Company:
Direct manufacturing labour use .......2.00 DMLH per batch
Variable manufacturing overhead ........ $4.00 per DMLH
French Bread Company recorded the following additional data for the year ended December 31, 2013:
Planned (budgeted) output ......... 3,840,000 baguettes
Actual production ............ 3,360,000 baguettes
Direct manufacturing labour ........ 50,400 DMLH
Actual variable MOH ............ $326,400
1. What is the denominator level used for allocating variable manufacturing overhead? (That is, for how many direct manufacturing labour-hours is French Bread budgeting?)
2. Prepare a variance analysis of variable manufacturing overhead.
3. Discuss the variances you have calculated and give possible explanations for them.

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  • CreatedJuly 31, 2015
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