Question

arley 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 & 2. Calculate the fixed overhead spending variance and volume variance for Barley Hopp.
3. Calculate the total over- or underapplied fixed manufacturing overhead for Barley Hopp.

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

• Req 1 and 2
• Req 3

Calculate the fixed overhead spending variance and volume variance for Barley Hopp. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

1.	Fixed Overhead Spending Variance
2.	Fixed Overhead Volume Variance

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

Fixed overhead

Answer 1

	1 & 2
		Fixed Overhead Spending Variance:-
		= Actual Fixed Overhead - Budgeted Fixed Overhead
		= $ 300,000 - $ 276,000
		= $ 24,000 Unfavorable (U)
		Fixed Overhead volume Variance:-
		= Budgeted Fixed Overhead - Applied Fixed Overhead
		= $ 276,000 - ( 125,000 x $2.30 )
		= $ 276,000 - $ 287,500
		= - $ 11,500 Favorable (F)
	3	Calculation of total Over or underapplied fixed manufacturing Overhead:-
		= Actual Fixed Overhead - Applied Fixed Overhead
		= $ 300,000 - $ 287,500
		= $ 12,500 underapplied