8-23. VARIABLE MANUFACTURING OVERHEAD VARIANCE ANALYSIS. The Sourdough 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 are some budget data for the Sourdough Bread Company:

• 1. Required
  2. 1. What is the denominator level used for allocating variable manufacturing overhead? (That is, for how many direct manufacturing labor-hours is Sourdough Bread budgeting?)
  3. 2. Prepare a variance analysis of variable manufacturing overhead. Use Exhibit 8-4 for reference.
  4. 3. Discuss the variances you have calculated and give possible explanations for them.
• 8-24. FIXED MANUFACTURING OVERHEAD VARIANCE ANALYSIS (CONTINUATION OF 8-23). The Sourdough Bread Company also allocates fixed manufacturing overhead to products on the basis of standard direct manufacturing labor-hours. For 2020, fixed manufacturing overhead was budgeted at $3.00 per direct manufacturing labor-hour. Actual fixed manufacturing overhead incurred during the year was $294,000.
  1. Required
  2. 1. Prepare a variance analysis of fixed manufacturing overhead cost. Use Exhibit 8-4 as a guide.
  3. 2. Is fixed overhead underallocated or overallocated? By what amount?
  4. 3. Comment on your results. Discuss the variances and explain what may be driving them.

The Sourdough Bread Company provides the following additional data for the year ended December 31, 2020