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.	$	1.10	per hr.		1.87
Fixed manufacturing overhead ($402,500.00 ÷ 175,000.00 units)							2.30

Barley Hopp had the following actual results last year:

Number of units produced and sold		180,000
Number of pounds of clay used		328,200
Cost of clay	$	623,580
Number of labor hours worked		225,000
Direct labor cost	$	3,082,500
Variable overhead cost	$	350,000
Fixed overhead cost	$	400,000

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.)

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.)

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.)

Answer 1

1. Direct Material Price Variance = (1.8 - 1.9) 328,200

=32,820 (U)

Direct material Quantity Variance = (306,000 - 328,200)1.8

39,960 (U)

Direct Material Cost Variance = 550,800 -623,580 = 72,780 (U)

2.

Direct Labor Rate Variance = (10 - 13.7)225,000

=832,500 (U)

Direct Labor efficiency Variance = (306,000 - 225,000) 10

=810,000 (F)

Direct Labor Spending Variance = 3,060,000 - 3,082,500

=22,500 (U)

3.variable overhead rate Variance = (1.10 - 1.56)225,000

=102,500 (U)

Variable Overhead efficiency Variance = (306,000 - 225,000)1.10

=89,100 (F)

Variable Overhead Spending Variance = 336,600 - 350,000

=13,400 (U)