SEE ANSWER

Question : The French Bread Company bakes baguettes for


The French Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two direct-cost categories: direct materials and direct manufacturing labor. Variable manufacturing overhead is allocated to products on the basis of standard direct manufacturing labor-hours. Following is some budget data for the French Bread Company:




The French Bread Company bakes baguettes for distribution to upscale grocery stores-1


The French Bread Company provides the following additional data for the year ended December 31, 2012:




The French Bread Company bakes baguettes for distribution to upscale grocery stores-2


Required:
1. What is the denominator level used for allocating variable manufacturing overhead? (That is, for how many direct manufacturing labor-hours is French Bread budgeting?)
2. Prepare a variance analysis of variable manufacturing overhead. Use Exhibit 8-4(p. 277) for reference.
3. Discuss the variances you have calculated and give possible explanations for them.

Exhibit 8-4:




The French Bread Company bakes baguettes for distribution to upscale grocery stores-3