Flexible Budgets, Overhead Cost Variances, and Management Control Variable 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. Variable manufacturing overhead is allocated to products on the basis of standard direct manufacturing labor-hours. Following is some budget data for the Sourdough Bread Company: Direct manufacturing labor use 0.02 hours per baguette Variable manufacturing overhead $10.00 per direct manufacturing labor-hour The Sourdough Bread Company provides the following additional data for the year ended December 31, 2017: 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 Use the blue shaded areas on the ENTERANSWERS tab for inputs. Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from the Instructions tab you will be marked wrong. Requirements 1 What is the denominator level used for allocating variable manufacturing overhead? (That is, for how many direct manufacturing labor-hours is Sourdough Bread budgeting?) 2 Prepare a variance analysis of variable manufacturing overhead. a. Use the ABS function when calculating variances, and use the drop-down selections for F (favorable) or U (unfavorable) when describing the variances.
Flexible Budgets, Overhead Cost Variances, and Management Control Variable 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. Variable manufacturing overhead is allocated to products on the basis of standard direct manufacturing labor-hours. Following is some budget data for the Sourdough Bread Company: Direct manufacturing labor use 0.02 hours per baguette Variable manufacturing overhead $10.00 per direct manufacturing labor-hour The Sourdough Bread Company provides the following additional data for the year ended December 31, 2017: 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 Use the blue shaded areas on the ENTERANSWERS tab for inputs. Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from the Instructions tab you will be marked wrong. Requirements 1 What is the denominator level used for allocating variable manufacturing overhead? (That is, for how many direct manufacturing labor-hours is Sourdough Bread budgeting?) 2 Prepare a variance analysis of variable manufacturing overhead. a. Use the ABS function when calculating variances, and use the drop-down selections for F (favorable) or U (unfavorable) when describing the variances.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Topic Video
Question
| Flexible Budgets, |
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| Variable Manufacturing Overhead |
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| 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. Variable manufacturing overhead is allocated to products on the basis of standard direct manufacturing labor-hours. Following is some budget data for the Sourdough Bread Company: | |||||
| Direct manufacturing labor use | 0.02 | hours per baguette | |||
| Variable manufacturing overhead | $10.00 | per direct manufacturing labor-hour | |||
| The Sourdough Bread Company provides the following additional data for the year ended December 31, 2017: | |||||
| 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 | ||||
| Use the blue shaded areas on the ENTERANSWERS tab for inputs. | |||||
| Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from the Instructions tab you will be marked wrong. | |||||
| Requirements | |||||
| 1 | What is the denominator level used for allocating variable manufacturing overhead? (That is, for how many direct manufacturing labor-hours is Sourdough Bread budgeting?) | ||||
| 2 | Prepare a variance analysis of variable manufacturing overhead. | ||||
| a. | Use the ABS function when calculating variances, and use the drop-down selections for F (favorable) or U (unfavorable) when describing the variances. |
Transcribed Image Text:1. What is the denominator level used for allocating variable manufacturing overhead?
(That is, for how many direct manufacturing labor-hours is Sourdough Bread budgeting?)
(Always use cell references and formulas where appropriate to receive full credit. If you
copy/paste from the Instructions tab you will be marked wrong.)
Ihours
2. Prepare a variance analysis of variable manufacturing overhead.
(Always use cell references and formulas where appropriate to receive full credit. If you
copy/paste from the Instructions tab you will be marked wrong. Use cell references from prior
calculations, if applicable.)
Flexible Budget:
Allocated: Budgeted
Budgeted Input
Actual Input Quantity Allowed for Allowed for Actual
Actual Output x
Input Quantity
Actual Costs Incurred:
Actual Input Quantity x
Quantity x
Output x Budgeted
Actual Rate
Budgeted Rate
Budgeted Rate
Rate
Spending variance
Efficiency variance
Flexible-budget variance
INSTRUCTIONS
ENTERANSWERS
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