Fixed manufacturing overhead variance analysis (continuation of 8-18). The French Bread Company has two direct-cost categories, direct materials and direct manufacturing labour. Fixed manufacturing overhead is allocated to products on the basis ofstandard direct manufacturing labours. Baguettes are baked in batches of 100 loaves. Following is some perti¬

nent data for the French Bread Company:

Direct manufacturing labour use 2.00 hours per batch Fixed manufacturing overhead $4.00 per direct labour-hour The French Bread Company recorded the following additional data for the year ended December 31, 2007:

Planned (budgeted) output Actual production Direct manufacturing labour Actual fixed MOH Required 1. Prepare a variance analysis offixed manufacturing overhead costs.

2. Is fixed overhead under- or overallocated? By how much?

3. Comment on your results. Discuss the various variances and explain what may be driving them.