Question

Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows. Direct materials (clay) Standard Quantity 1.70 lbs. Standard Standard Price (Rate) Unit Cost $ 1.89 $ 3.86 1.70 hrs. $ 10.00 per hr. 17.00 Direct labor Variable manufacturing overhead (based on direct labor hours) Fixed manufacturing overhead ($346,500.00 + 165,000.00 units) per 1.70 hrs. $ 1.40 hr. 2.38 2.10 Barley Hopp had the following actual results last year Number of units produced and sold 170,000 Number of pounds of clay used 308, 200 Cost of clay $ 585,580 Number of labor hours worked 215,000 Direct labor cost $2,795,000

Answer 1

Requried 1 :
Actual direct materials rate = Actual direct materials cost / Actual direct materials quantity = 585580 / 308200	1.90
Direct materials price variance = ( Actual price - Standard price ) * Actual quantity = ( 1.90 - 1.80 ) * 308200	30820	U
Standard direct materials quantity for actual production = Standard direct materials quantity per unit * Actual unit production = 1.70 * 170000	289000
Direct materials quantity variance = ( Actual quantity - Standard quantity ) * Standard rate = ( 308200 - 289000 ) * 1.80	34560	U
Standard direct materials cost for actual production = Standard direct materials quantity for Actual production * Standard rate = 289000 * 1.80	520200
Direct materials spending variance = Actual cost - Standard cost = 585580 - 520200	65380	U

Required 2 :
Actual direct labor rate = Actual direct labor cost / Actual direct labor hours = 2795000 / 215000	13.00
Direct labor rate variance = ( Actual rate - Standard rate ) * Actual hours = ( 13.00 - 10.00 ) * 215000	645000	U
Standard direct labor hours for actual production = Standard direct labor hours per unit * Actual units production = 1.70 * 170000	289000
Direct labor efficiency variance = ( Actual hours - Standard hours ) * Standard rate = ( 215000 - 289000 ) * 10.00	740000	F
Standard direct labor cost for actual production = Standard direct labor hours for actual production * Standard rate = 289000 * 10.00	2890000
Direct labor spending variance = Actual cost - Standard cost = 2795000 - 2890000	95000	F

Required 3 :
Actual variable overhead rate = Actual variable overhead cost / Actual direct labor hours = 330000 / 215000	1.53
Variable overhead rate variance = ( Actual rate - Standard rate ) * Actual hours = ( 1.53 - 1.40 ) * 215000	27950	U
Variable overhead efficiency variance = ( Actual hours - Standard hours ) * Standard rate = ( 215000 - 289000 ) * 1.40	103600	F
Standard variable cost for actual production = Standard direct labor hours for actual production * Standard rate = 289000 * 1.40	404600
Variable overhead spending variance = Actual cost - Standard cost = 330000 - 404600	74600	F