Question

Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows:

	Standard Quantity		Standard Price (Rate)			Standard Unit Cost
Direct materials (clay)	1.70	lbs.	$	1.80	per lb.	$	3.06
Direct labor	1.70	hrs.	$	10.00	per hr.		17.00
Variable manufacturing overhead (based on direct labor hours)	1.70	hrs.	$	1.40	per hr.		2.38
Fixed manufacturing overhead ($346,500.00 ÷ 165,000.00 units)							2.10

Barley Hopp had the following actual results last year:

Number of units produced and sold		170,000
Number of pounds of clay used		308,200
Cost of clay	$	585,580
Number of labor hours worked		215,000
Direct labor cost	$	2,795,000
Variable overhead cost	$	330,000
Fixed overhead cost	$	340,000

Required:
1. Calculate the direct materials price, quantity, and total spending variances for Barley Hopp. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable and "U" for unfavorable.)
direct materials price variance

direct materials quantity variance

direct materials spending variance


2. Calculate the direct labor rate, efficiency, and total spending variances for Barley Hopp. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable and "U" for unfavorable.)

Direct Labor

Efficiency

Total spending variances



3. Calculate the variable overhead rate, efficiency, and total spending variances for Barley Hopp. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable/Overapplied and "U" for unfavorable/underapplied.)

overhead rate variance

efficiency variance

spending variances

Answer 1

1) Direct material price variance = (SP-AP) AQ = (1.8*308200-585580) = 30820 U

Direct material quantity variance = (SQ-AQ)SP = (170000*1.7-308200)*1.8 = 34560 U

Total material variance = (170000*3.06-585580) = 65380 U

2) Direct labor rate variance = (SR-AR)AH = (10*215000-2795000) = 645000 U

Direct labor efficiency variance = (SH-AH)SR = (170000*1.7-215000)*10 = 740000 F

Total labor variance = (170000*17-2795000) = 95000 F

3) Variable overhead rate variance = (1.4*215000-330000) = 29000 U

Variable overhead efficiency variance = (289000-215000)*1.4 = 103600 F

Total Variable overhead variance = (170000*2.38-330000) = 74600 F