The French Bread Company bakes baguettes for distribution to upscale grocery stores. The company has twodirect-cost categories: direct materials and direct manufacturing labor. Variable manufacturing overhead is allocated to products on

the basis of standard direct manufacturinglabor-hours.

Direct manufacturing labor use

0.02 hours per baguette

Variable manufacturing overhead

$10.00 per direct manufacturing labor-hour

Planned (budgeted) output

3,300,000 baguettes

Actual production

3,200,000 baguettes

Direct manufacturing labor

58,400 hours

Actual variable manufacturing overhead

$ 765,040

The French Bread Company also allocates fixed manufacturing overhead to products on the basis of standard direct manufacturinglabor-hours. For 2017, fixed manufacturing overhead was budgeted at $4.00 per direct manufacturinglabor-hour. Actual fixed manufacturing overhead incurred during the year was $293,000.

1.

Make 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.