Question

Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows: Standard Price (Rate) 1.70 per lb $14.00 per hr. Standard Standard Unit Cost $2.72 22.40 Quantity 1.60 lbs. Direct materials (clay) 1.60 hrs. Direct labor Variable manufacturing overhead (based on direct 1abor hours) Fixed manufacturing overhead ($352,000.00 160,000.00 units) 2.08 $ 1.30 per hr. 1.60 hrs. 2.20 Barley Hopp had the following actual results last year Number of units produced and sold Number of pounds of clay used Cost of clay Number of labor hours worked Direct labor cost Variable overhead cost 165,000 298,200 536,760 210,000 $3,780,000 $ 320,000 355,000 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. 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 hv selectina "F" for favorable. "U" for unfavorahle. and "None" for no effect <Prev 6 of 8 Next>

Answer 1

1. Direct Material Actual Units produced Actual Number of Pounds of Clay used (AQ) Cost of Clay Cost of Clay per pound ($536,760 / 298,200) (AP) 165,000 298, 200 lbs 536,760 1.80 per lbs Standard pounds required for 1 unit of production Standard quantity allowed (165,000 1.60) (SQ) Standard price (SP) 1.60 lbs per unit 264,000 lbs 1.70 per lb Direct Material Price Variance (Actual Quantity x Actual Price) - (Actual Quantity Standard Rate) (298,200 x 1.80) - (298,200 x 1.70) 536,760-506,940 29,820 Unfavorable Reason: Actual Price is more than the standard price. Therefore it is unfavorable Variance Direct Material Quantity Variance (Actual Quantity * Standard Rate) - (Standard Quantity Standard Rate) (298,200 x 1.70) - (264,000 x 1.70) 506,940 - 448,800 58,140 Unfavorable Reason: Actual Quantity used is more than the standard quantity allowed. Therefore it is unfavorable Variance Direct Mateiral Spending Variance Direct Material price variance Direct Material Quantity Variance Direct Material Spending Variance (58,140-29,820) 29,820 F 58,140 U 28,320

2. Direct Labor Actual Units produced Actual labor hours worked (AH) Direct labor cost Cost of per hour (3,780,000 / 210,000) (AR) 165,000 210,000 hr 3,780,000 18.00 per hr $ Standard hours required for 1 unit of production Standard hours allowed (165,000 1.60) (SH) Standard rate (SR) 1.60 hr per unit 264,000 hr 14.00 per hr Direct Labor Rate Variance (Actual Hour x Actual Rate) - (Actual Hour x Standard Rate) (210,000 x 18.00) - (210,000 x 14.00) 3,780,000 -2,940,000 840,000 Unfavorable Reason: Actual Rate is more than the standard Rate. Therefore it is unfavorable Variance Direct Labor Efficiency Variance (Actual Hour x Standard Rate) - (Standard Hour x Standard Rate) (210,000 x 14.00) - (264,000 x 14.00) 2,940,000 - 3,696,000 756,000 Favorable Reason: Actual hours used is less than the standard hours allowed. Therefore it is favorable Variance Direct Labor Spending Variance Direct Labor Rate variance Direct Labor Efficiency Variance Direct Labor Spending Variance (840,000 - 756,000) 840,000 U 756,000 84,000 U

3) Variable overhead Variable overhead rate variance Actual Variable overhead - (Actual hours x Standard rate per hour) 320,000 - (210,000 x $ 1.30) 320,000 - 273,000 47,000 unfavorable Reason: Actual Rate is more than the standard Rate. Therefore it is unfavorable Variance. Variable overhead efficiency variance (Actual hours x Standard rate per hour) - (Standard hours x Standard rate per hour) (210,000 x $ 1.30) - (264,000 x 1.30) 273,000 - 343,200 70,200 Favorable Reason: Actual hours used is less than the standard hours allowed. Therefore it is favorable Variance Variable overhead rate variance Variable overhead efficiency variance Total Spending variance (70,200 - 47,000) 47,000 unfavorable 70,200 Favorable 23,200 Favorable