FIXED MANUFACTURING OVERHEAD VARIANCE ANALYSIS
	The Sourdough Bread Company also allocates fixed manufacturing overhead products on the basis of standard direct manufacturing labour-hours. For 2017, fixed manufacturing overhead was budgeted at $3.00 per direct manufacturing labour-hour. Actual fixed manufacturing overhead incurred during the year was $294,000.
	Required
1	Prepare a variance analysis of fixed manufacturing overhead costs. Use Exhibit 8-4 (page 296) as a guide.
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.

 

Exhibit 8-4 Level 3 FMOH Variance Analysis for Webb Company for April 2018 Actual FMOH Cost Pool Flexible and Static FMOH Flexible and Static FMOH Allocated Q DMH for 10,000 Jackets SRate/DMH (0.40 DMH/jacket 10,000 jackets X $57.50/DMH) $285,000 $276,000 $276,000 $230,000 $9,000 U $46,000 U Rate variance $9,000 U Flexible-budget variance Production-volume variance $46,000 U Production-volume variance $55,000 Underallocated Under- or overallocated FMOH