Problem:
Fixed manufacturing overhead variance analysis
The French Bread Company also allocates fixed manufacturing overhead to products on the basis of standard direct manufacturing labor-hours. For 2009, fixed manufacturing overhead was budgeted at $4.00 per direct manufacturing; labor-hour. Actual fixed manufacturing overhead incurred during the year was $272,000.
1. Prepare a variance analysis of fixed manufacturing overhead cost. Use Exhibit 8-4 as a guide
2. Is fixed overhead underallocated or overallocated by what amount?
3. Comment on your results. Discuss the variances and explain what may be driving them.