Fixed manufacturing overhead variance analysis
Response to the following problem:
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.
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.