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)

1.60

lbs.

$

1.70

per lb.

$

2.72

Direct labor

1.60

hrs.

$

12.00

per hr.

19.20

Variable manufacturing overhead (based on direct labor hours)

1.60

hrs.

$

1.10

per hr.

1.76

Fixed manufacturing overhead ($450,000.00 ÷ 150,000.00 units)

3.00

---

Barley Hopp had the following actual results last year:

Number of units produced and sold

155,000

Number of pounds of clay used

278,200

Cost of clay

$

445,120

Number of labor hours worked

200,000

Direct labor cost

$

3,000,000

Variable overhead cost

$

300,000

Fixed overhead cost

$

470,000

---

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 Rate Variance
Direct Labor Efficiency Variance
Direct Labor Spending Variance

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.)

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

Answer 1

1
Direct materials price variance=445120-(278200*1.7)= $27820 F
Direct materials quantity variance=1.7*(278200-155000*1.6)= $51340 U
Direct materials spending variance=445120-(155000*2.72)= $23520 U
2
Direct labor rate variance=3000000-(200000*12)= $600000 U
Direct labor efficiency variance=12*(200000-155000*1.6)= $576000 F
Direct labor spending variance=3000000-(155000*19.2)= $24000 U
3
Variable overhead rate variance=300000-(200000*1.1)= $80000 U
Variable overhead efficiency variance=1.1*(200000-155000*1.6)= $52800 F
Variable overhead spending variance=300000-(155000*1.76)= $27200 U