Flexible Budgets, Overhead Cost Variances, and Management Control Fixed manufacturing overhead variance analysis The Sourdough Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two direct-cost categories: direct materials and direct manufacturing labor. The Sourdough Bread Company allocates fixed manufacturing overhead to products on the basis of standard direct manufacturing labor-hours. The following is some budget data for the Sourdough Bread Company for 2017. Direct manufacturing labor use 0.02 hours per baguette Fixed manufacturing overhead $3.00 per direct manufacturing labor-hour The following is additional information for the Sourdough Bread Company for the year ended December 31, 2017: Planned (budgeted) output 3,100,000 baguettes Actual production 2,600,000 baguettes Budgeted direct manufacturing labor 62,000 hours Actual direct manufacturing labor 46,800 hours Actual fixed manufacturing overhead $294,000 Use the blue shaded areas on the ENTERANSWERS tab for inputs. Requirements 1 Prepare a variance analysis of fixed manufacturing overhead cost. Use the exhibit that shows the variance analysis of fixed manufacturing overhead cost as a guide. a. For variances with a zero amount, leave the box empty; do not select a label or enter a zero. b. Use the ABS function when calculating variances, and use the drop-down selections for F or U when describing the variances. 2 Is fixed overhead underallocated or overallocated? By what amount? a. U

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Flexible Budgets, Overhead Cost Variances, and Management Control
Fixed manufacturing overhead variance analysis

The Sourdough Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two direct-cost categories: direct materials and direct manufacturing labor. The Sourdough Bread Company allocates fixed manufacturing overhead to products on the basis of standard direct manufacturing labor-hours. The following is some budget data for the Sourdough Bread Company for 2017.

Direct manufacturing labor use	0.02	hours per baguette
		Fixed manufacturing overhead	$3.00	per direct manufacturing labor-hour

The following is additional information for the Sourdough Bread Company for the year ended December 31, 2017:
		Planned (budgeted) output	3,100,000	baguettes
		Actual production	2,600,000	baguettes
		Budgeted direct manufacturing labor	62,000	hours
		Actual direct manufacturing labor	46,800	hours
		Actual fixed manufacturing overhead	$294,000

Use the blue shaded areas on the ENTERANSWERS tab for inputs.


Requirements
1	Prepare a variance analysis of fixed manufacturing overhead cost. Use the exhibit that shows the variance analysis of fixed manufacturing overhead cost as a guide.
	a.	For variances with a zero amount, leave the box empty; do not select a label or enter a zero.
	b.	Use the ABS function when calculating variances, and use the drop-down selections for F or U when describing the variances.
2	Is fixed overhead underallocated or overallocated? By what amount?
	a.	Use the ABS function when calculating the underallocated or overallocated amount.)

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