The Brown 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 Brown Bread Company:

Budget data

Direct manufacturing labor use

0.02 hours per baguette

Variable manufacturing overhead

$10.00 per direct manufacturing labor-hour

The Brown Bread Company provides the following additional data for the year ended December 31, 2017:

Planned (budgeted) output	3,500,000	baguettes
Actual production	3,200,000	baguettes
Direct manufacturing labor	58,300	hours
Actual variable manufacturing overhead	$781,220

1.

What is the denominator level used for allocating variable manufacturingoverhead? (That is, for how many direct manufacturing labor-hours is

Brown Bread budgeting?)

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	x	Flexible	Allocated
	Incurred	Budgeted Rate	Budget	Overhead
Variable MOH

3.

Discuss the variances you have calculated and give possible explanations for them.