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The Granary Bread Company provides the following additional data for the year ended December 31, 2017: The Granary 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 Granary Bread Company: E(Click the icon to view the additional data.) Read the requirements Data Table Data Table ting?) Planned (budgeted) output 3,500,000 baguettes 0.02 hours per baguette Direct manufacturing labor use Actual production 3,100,000 baguettes Variable manufacturing overhead 10.00 per direct manufacturing labor-hour Direct manufacturing labor 56.500 hours Actual variable manufacturing overhead $734,500 Print Done Print Done Overhead 620.000 Requirement 1. What is the denominator level used for allocating variable manufacturing overhead? (That is, for how many direct manufacturing labor-hours is Granary Bread budgeting?) 70,000 hours The denominator level is Requirement 2. Prepare a variance analysis of variable manufacturing overhead. Begin by calculating the following amounts for the variable overhead that will be used to calculate the variances. Actual Input Actual Costs Flexible Allocated X Budget Incurred Budgeted Rate Overhead 620,000 $ 734,500 $ 620,000 565,000 $ Variable MOH Now complete the 4-variance analysis using the amounts you calculated above. (If no variance exists leave the dollar value blank. Label the variance as favorable (F), unfavorable (U) or never a variance (N).) 4-Variance Spending Efficiency Production-Volume Variance Analysis Variance Variance 169,500 U 55,000 Variable MOH Requirement 3. Discuss the variances you have calculated and give possible explanations for them. unfavorable because variable manufacturing overhead was 30 %higher than planned. A possible The spending variance is increase in energy rates relative to the rate per standard labor-hour assumed in the flexible budget. explanation could be a(n) than the number of hours in the flexible budget. Labor was more The efficiency variance is favorable because the actual number of direct manufacturing labor-hours required was lower efficient in producing the baguettes than morale in the company, which could result from an increase in wages or an improvement management had anticipated in the budget. This could occur because of improved the compensation scheme. 114,500 isunfavorable because the efficiency variance was not large enough The flexible-budget variance of $ to compensate for the spending variance