What is the denominator level used

Reference no: EM131972145

Problem

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 manufacturing overhead? (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.

Reference no: EM131972145

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