Question

Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows: Standard Standard Price Standard Unit Cost 3.06 17.00 Quantity 1.7e lbs. 1.7e hrs (Rate) 1.80 per 1b $1e.ee per hr Direct materials (clay) Direct labor Variable manufacturing overhead (based on direct labor hours) Fixed manufacturing overhead ($482,508.ee 175,eee.ee units) 1.7e hrs 1.1e per hr 1.87 2.30 Barley Hopp had the following actual results last year Number of units produced and sold Number of pounds of clay used Cost of clay 18e, 8ee 328, 200 623,580 225,eee $3,e82,5ee 350,eee $ 400,08e Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 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

Answer 1

Actual price per lb = $623,580/328,200 = $1.9 Standard quantity allowed = 180,000*1.70 = 306,000 Direct materials price variance = (Actual price-Standard price) *Actual quanity Direct materials price variance = ($1.9-$1.80) *328,200 Direct materials price variance = $32,820 Unfavorable Direct materials quantity variance = (Actual quanity-Standard quantity) *Standard price Direct materials quantity variance = (328,200-306,000) *$1.8 Direct materials quantity variance = $39,960 Unfavorable Direct materials spending variance = (Actual price*Actual quantity)-(Standard price*Standard quantity) Direct materials spending variance = ($1.9*328,200)-($1.80*306,000) Direct materials spending variance = $623,580 - $550,800 Direct materials spending variance = $72,780 Unfavorable

Actual rate per hour = $3,082,500/225,000 = $13.7 Standard hours allowed = 180,000*1.70 = 306,000 Direct labor rate variance = (Actual rate-Standard rate) * Actual hours Direct labor rate variance = ($13.7-$10)*225,000 Direct labor rate variance = $832,500 Unfavorable Direct labor efficiency variance = (Actual hours-Standard hours)*Standard rate Direct labor efficiency variance = (225,000-306,000) * $10 Direct labor efficiency variance = $810,000 Favorable Direct labor spending variance = (Actual hours*Actual rate)-(Standard hours*Standard rate) Direct labor spending variance = (225,000*$13.7)-(306,000*$10) Direct labor spending variance = $3,082,500 - $3,060,000 Direct labor spending variance = $22,500 Unfavorable

Actual rate per hour = $350,000/225,000 = $1.5555 Standard hours allowed = 180,000*1.70 = 306,000 Variable overhead rate variance = (Actual rate-Standard rate) *Actual hours Variable overhead rate variance = ($1.555-$1.1) *225,000 Variable overhead rate variance = $102,500 Unfavorable Variable overhead efficiency variance = (Actual hours-Standard hours) *Standard rate Variable overhead efficiency variance = (225,000-306,000)*$1.1 Variable overhead efficiency variance = $89,100 Favorable Variable overhead spending variance = (Actual hours*Actual rate)-(Standard hours Standard rate) Variable overhead spending variance = $350,000-(306,000*$1.1) Variable overhead spending variance = $350,000-$336,600 Variable overhead spending variance = $13,400 Unfavorable