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The French Bread Company also allocates fixed manufacturing overhead to products on the basis of standard direct manufacturing labor-hours. For 2014, fixed manufacturing overhead was budgeted at $4.00 per direct manufacturing labor-hour. Actual fixed manufacturing overhead incurred during the year was $272,000. Required: 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. 2. The fixed manufacturing overhead is underallocated by $48,000. 3. The production-volume variance of $32,000 U captures the difference between the budgeted 3,200,0000 baguettes and the lower actual 2,800,000 baguettes producedthe fixed cost capacity not used. The spending variance of $16,000 U means that the actual aggregate of fixed costs ($272,000) exceeds the budget amount ($256,000). For example, monthly leasing rates for baguette-making machines may have increased above those in the budget for 2014. e 1.e Budgeted standard direct manufacturing labor used per baguette Budgeted output baguettes e le Budgeted standard direct manufacturing labor-hourse le Budgeted fixed manufacturing overhead costse) Actual output = e e Allocated fixed manufacturing overheade = Fixed Manufacturing Overhead Variance Analysis for French Bread Company for 2014 Actual Costs Incurred e Flexible Budget: Same Budgeted Same Budgeted Lump Sum Lump Sum (as in Static Budget) (as in Static Budget) Regardless of Regardless of Output Level Output Levele (2) (3) Allocated: Budgeted Input Qty. Allowed for Actual Output x Budgeted Rate (1) e t e ti e e Spending variance Never a variance t e Production-volume variancee t e L e Flexible Budget variance e Production-volume Variancee 2 e e - Underallocated Fixed Overhead (Total Fixed Overhead Variance)