The Malt Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two direct cost categories: direct materials and direct manufacturing labor. The Malt Bread Company allocated fixed manufacturing overhead to products on the basis of standard direct manufacturing labor hours.

The following is some budget data for the Malt Bread Company for 2017 and additional information for the gear ended December 21, 2017.

Direct manufacturing labor use: .02 hours per baguette.

Fixed manufacturing overhead: $3.00 per direct manufacturing labor-hour

Planned (budgeted) output 3,600,000 baguettes Actual production 2,900,000 baguettes Budgeted direct manufacturing labor 72,000 hours actual direct manufacturing labor 52,100 hours Actual fixed manufacturing overhead $286,000

1. Prepare a variance analysis of fixed manufacturing overhead cost.

2. Is fixed overhead underallocated or overallocated? By what amount?

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