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The Rye Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two direct-cost categories: direct materials and direct manufacturing labor. Variable

The Rye 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 Rye Bread Company:

Direct manufacturing labor use

0.02

hours per baguette

Variable manufacturing overhead

$10.00

per direct manufacturing labor-hour

The Rye Bread Company provides the following additional data for the year ended December 31, 2014:

Planned (budgeted) output

3,700,000

baguettes

Actual production

2,500,000

baguettes

Direct manufacturing labor

44,700

hours

Actual variable manufacturing overhead

$594,510

Requirments

1.

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

2.

Prepare a variance analysis of variable manufacturing overhead.

3.

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

Requirement 1. What is the denominator level used for allocating variable manufacturing overhead? (That is, for how many direct manufacturing labor-hours is Rye

Bread budgeting?)

The denominator level is _ hours.

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