Question

Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows: Standard Quantity 1.7 lbs. 1.7 hrs. Standard Price (Rate) $ 1.80 per lb. $ 12 per hr. Standard Unit Cost $ 3.06 20.40 Direct materials (clay) Direct labor Variable manufacturing overhead (based on direct labor hours) Fixed manufacturing overhead ($425,588 = 185,000 units) 1.7 hrs. $ 1.1 per hr. 1.87 2.38 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 Fixed overhead cost 190.se 348, 289 $ 661,580 235, eee $3,901,880 $ 378,080 $ 415, see 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.

Answer 1

Fixed overhead spending variance = Budgeted fixed overheads - Actual fixed overheads

  = 425500 - 415000

  = $10,500 F

Fixed overhead volume variance = (Standard Units - Budgeted Units) * SR

  = (190000 - 185000) * 2.3

  = $11,500 F

Allocated Overhead (190000 * 2.3) = 437,000

Actual Overhead    = 415,000

Over applied Overhead =$22,000