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The Lebanese Bakery Inc. also allocates FMOH to products on the basis of standard direct manufacturing labor$-$hours. For the year, FMOH was budgeted at $$4\mathrm{.}00$ per DMLH$.$ Actual FMOH incurred during the year was $$272,000.$

Baguettes are baked in batches of $100$ loaves. Following are some pertinent data for Lebanese Bakery Inc:

Direct manufacturing labor use: $2\mathrm{.}00$ DMLH per batch

Fixed manufacturing overhead: $$4\mathrm{.}00$ per DMLH

Lebanese Bakery Inc. recorded the following additional data for the year ended December $31$:

Planned $($budgeted$)$ output $3,840,000$ baguettes

Actual production $3,360,000$ baguettes

Direct manufacturing labor $50,400$ DMLH

Actual fixed MOH $$272,000$

Question:

$1)$ Why do we use these headings in specific? Explain each heading.

$2)$ How do you know whether the rate variance $($$$35200$ F$)$ and production volume$-$variance $($$$38400$ U$)$ are favourable or unfavourable? Is there a formula to use? Please explain.

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