The

SourdoughSourdough

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

SourdoughSourdough

Bread Company:

Direct manufacturing labor use	0.02	hours per baguette
Variable manufacturing overhead	$10.00	per direct manufacturing labor-hour

The

SourdoughSourdough

Bread Company provides the following additional data for the year ended December 31,

20172017:

Planned (budgeted) output

3,100,000

baguettes

Actual production

2,600,000

baguettes

Direct manufacturing labor

46,800

hours

Actual variable manufacturing overhead

$617,760

1.

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

SourdoughSourdough

Bread budgeting?)

2.

Prepare a variance analysis of variable manufacturing overhead.

3.

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