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.	$	11.00	per hr.		18.70
Variable manufacturing overhead (based on direct labor hours)	1.70	hrs.	$	1.10	per hr.		1.87
Fixed manufacturing overhead ($420,500.00 ÷ 145,000.00 units)							2.90

Barley Hopp had the following actual results last year:

Number of units produced and sold		150,000
Number of pounds of clay used		268,200
Cost of clay	$	455,940
Number of labor hours worked		195,000
Direct labor cost	$	2,827,500
Variable overhead cost	$	290,000
Fixed overhead cost	$	440,000

Required:
1. Calculate the direct materials price, quantity, and total spending variances for Barley Hopp.
2. Calculate the direct labor rate, efficiency, and total spending variances for Barley Hopp.
3. Calculate the variable overhead rate, efficiency, and total spending variances for Barley Hopp.

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2
• Required 3

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, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Direct Materials Price Variance
Direct Materials Quantity Variance
Direct Materials Spending Variance

• Required 2
• Required 3

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, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Direct Labor Rate Variance
Direct Labor Efficiency Variance
Direct Labor Spending Variance

• Required 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, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Variable Overhead Rate Variance
Variable Overhead Efficiency Variance
Variable Overhead Spending Variance

Answer 1

1) Direct material price variance = (SP-AP)AQ = (1.8*268200-455940) = 26820 F

Direct material quantity variance = (SQ-AQ)SP = (150000*1.7-268200)*1.8 = 23760 U

Direct material spending variance = (150000*3.06-455940) = 3060 F

2) Direct labor rate variance = (SR-AR)AH = (11*195000-2827500) = 682500 U

Direct labor efficiency variance = (SH-AH)SR = (150000*1.7-195000)*11 = 660000 F

Direct labor spending variance = (150000*18.70-2827500) = 22500 U

3) variable overhead rate variance = (1.1*195000-290000) = 75500 U

Variable overhead efficiency variance = (255000-195000)*1.1 = 66000 F

Variable overhead spending variance = (150000*1.87-290000) = 9500 U