The Boston Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two? direct-cost
Question:
The Boston Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two? direct-cost categories: direct materials and direct manufacturing labor. The Boston Bread Company allocates fixed manufacturing overhead to products on the basis of standard direct manufacturing? labor-hours. For 2014?, the following is some budget data for the Boston Bread? Company:
Direct manufacturing labor use | 0.02 | hours per baguette |
Fixed manufacturing overhead | ?$3.00 | per direct manufacturing?labor-hour |
The Boston Bread Company provides the following additional data for the year ended December? 31, 2014?:
Planned (budgeted) output | 3,700,000 | baguettes |
Actual production | 2,700,000 | baguettes |
Budgeted direct manufacturing labor | 74,000 | hours |
Actual direct manufacturing labor | 48,100 | hours |
Actual fixed manufacturing overhead | $289,000 |
Requirments
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. |
Requirement 1. Prepare a variance analysis of fixed manufacturing overhead cost.
Begin by completing the table below for the fixed manufacturing overhead that will be used to calculate the variances.
Same Budgeted | ||||
Lump Sum | ||||
Actual Costs | Regardless of | Flexible | Allocated | |
Incurred | Output Level | Budget | Overhead | |
Fixed MOH |
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 978-0134475585
16th edition
Authors: Srikant M. Datar, Madhav V. Rajan