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, 2020: Planned (budgeted) output 3,300,000 baguettes Actual production 2,400,000 baguettes Direct manufacturing labor 42,300 hours Actual variable manufacturing overhead $554,130.00 Requirement
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?) The denominator level is_______ Hours
2. Prepare variance analysis of variable manufacturing overhead.
3. Discuss the variances you have calculated and give possible explanations for them.