- The White Bread Company Bakes Baguettes For Distribution To Upscale Grocery Stores The Company Has Two Direct Cost Cate 1 (13.47 KiB) Viewed 34 times
- The White Bread Company Bakes Baguettes For Distribution To Upscale Grocery Stores The Company Has Two Direct Cost Cate 2 (10.35 KiB) Viewed 34 times
for the year ended December 31,2020
- The White Bread Company Bakes Baguettes For Distribution To Upscale Grocery Stores The Company Has Two Direct Cost Cate 3 (12.75 KiB) Viewed 34 times
- The White Bread Company Bakes Baguettes For Distribution To Upscale Grocery Stores The Company Has Two Direct Cost Cate 4 (16.79 KiB) Viewed 34 times
The denominator level is ___ hours
Requirement 2
Actual costs incurred
Actual input x budget rate
Flexible budget
Allocated overhead
Variable MOH
4 variance analysis
Spending variance
Efficiency variance
Production volume variance
Variable MOH
Requirement 3
The spending variance is (favorable or unfavorable)
because variable manufacturing overhead was ___% (higher or
lower) than planned. A possible explanation could be a(n) (increase
or decrease) in energy rates relative to the rate per standard
labor hour assumed in the flexible budget.
The efficiency variance is (favorable or unfavorable)
because the actual number of direct manufacturing labor hours
required was (higher or lower) than the number of hours in the
flexible budget. Labor was (more or less) efficient in producing
the baguettes than management had anticipated in the budget. This
could occur because of (improve or a decline in) morale in the
company, which could result from an increase in wages or an
improvement in the compensation scheme.
The flexible budget variance of $_____ is (unfavorable
or favorable) because the efficiency variance was (large or not
large enough) to compensate fo the spending
variance
The White 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 White Bread Company:
Data table Direct manufacturing labor use Variable manufacturing overhead 0.02 hours per baguette $10.00 per direct manufacturing labor-hour
Planned (budgeted) output Actual production Direct manufacturing labor Actual variable manufacturing overhead 2,800,000 baguettes 3,100,000 baguettes 56,100 hours $774,180
1. What is the denominator level used for allocating variable manufacturing overhead? (That is, for how many direct manufacturing labor-hours is White Bread budgeting?) 2. Prepare a variance analysis of variable manufacturing overhead. 3. Discuss the variances you have calculated and give possible explanations for them.