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)	1.7	lbs.	$	1.80	per lb.	$	3.06
Direct labor	1.7	hrs.	$	13	per hr.		22.10
Variable manufacturing overhead (based on direct labor hours)	1.7	hrs.	$	1.1	per hr.		1.87
Fixed manufacturing overhead ($276,000 ÷ 120,000 units)							2.30

Barley Hopp had the following actual results last year:

Number of units produced and sold		125,000
Number of pounds of clay used		218,200
Cost of clay	$	370,940
Number of labor hours worked		170,000
Direct labor cost	$	2,805,000
Variable overhead cost	$	240,000
Fixed overhead cost	$	300,000

Required:
1. Calculate the fixed overhead spending variance for Barley Hopp. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable,"U" for unfavorable.)



2. Calculate the fixed overhead volume variance for Barley Hopp. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable,"U" for unfavorable.)



3. Calculate the total over- or underapplied fixed manufacturing overhead for Barley Hopp. (Do not round your intermediate calculations.)

Answer 1

Answer:

1. Fixed overhead spending variance =Actual Fixed Overhead - Budgeted Fixed Overhead

= 300,000 – 276,000

Fixed overhead spending variance = $ 24000 Unfavorable

2. Fixed overhead volume variances    = (Budgeted Fixed Overhead - Actual Unit * Standard Rate)

= (276,000 - $2.30 * 125000 units)

        Fixed overhead volume variances = $ 11,500 Favorable

3. Total Over/under applied fixed manufacturing overhead

Particulars	Amount $
actual fixed overhead	300,000
fixed overhead applied (125000*2.3)	287,500
Under applied fixed overhead	$12,500