The French Bread Company bakes baguettes for distribution to upscale grocery stores. The company has twodirect-cost categories: direct materials and direct manufacturing labor. The French Bread Company allocates fixed manufacturing overhead to products on the basis of standard direct manufacturinglabor-hours. For 2020, fixed manufacturing overhead was budgeted at $4.00 per direct manufacturinglabor-hour. Actual fixed manufacturing overhead incurred during the year was $289,000.

Direct manufacturing labor use: $0.02 hours per baguette

Variable manufacturing overhead: $10:00 per direct manufacturing labor-hour

Planned (budgeted) output: 3,000,000 baguettes

Actual production: 2,700,000 baguettes

Direct manufacturing labor: 48,400 hours

Actual variable manufacturing overhead: $634,040

1.

Prepare a variance analysis of fixed manufacturing overhead cost.

2.

Is fixed overhead underallocated oroverallocated? By whatamount?

3.

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