The Whole Bread Company bakes baguettes for distribution to upscale grocery stores. The company
has two direct-cost categories: direct materials and direct manufacturing labor. The Whole Bread
Company allocates fixed manufacturing overhead to products on the basis of standard direct
manufacturing labor-hours. For 2020, fixed manufacturing overhead was budgeted at $4.00 per direct
manufacturing labor-hour. Actual fixed manufacturing overhead incurred during the year was $290,000.
The following is some budget data for the Whole Bread Company for 2020 and additional
information for the year ended December 31, 2020.
Data table
-
X
Direct manufacturing labor use
Variable manufacturing overhead
0.02 hours per baguette
$10.00 per direct manufacturing labor hour
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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
Fixed MOH
Actual Costs
Incurred
Same Budgeted
Lump Sum
Regardless of
Output Level
Flexible
Budget
Allocated
Overhead
290000
Planned (budgeted) output
Actual production
Direct manufacturing labor
Actual variable manufacturing overhead
$629,200
2,800,000 baguettes
2,700,000 baguettes
48,400 hours
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