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8-23 Variable manufacturing overhead, variance analysis. Baking Bad bakes tarts for distrib upscale grocery stores. The company has two direct-cost categories: direct materials and
8-23 Variable manufacturing overhead, variance analysis. Baking Bad bakes tarts for distrib upscale grocery stores. The company has two direct-cost categories: direct materials and direc facturing labor. Variable manufacturing overhead is allocated to products on the basis of standar manufacturing labor-hours. Following are some budget data for Baking Bad: Direct manufacturing labor use Variable manufacturing overhead 0.02 hours per tart 10.00 per direct manufacturing labor-hour Baking Bad provides the following additional data for the year ended December 31, 2020: Planned (budgeted) output 3,200,000 tarts Actual production 2,800,000 tarts Direct manufacturing labor Actual variable manufacturing overhead 50,400 hours 680,400 1. What is the denominator level used for allocating variable manufacturing overhead? (That is, many direct manufacturing labor-hours is Baking Bad budgeting?) 2. Prepare a variance analysis of variable manufacturing overhead. Use Exhibit 8-4 (page reference. 3. Discuss the variances you have calculated and give possible explanations for them.
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