Question

Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows:

	Standard   Quantity	Standard Price (Rate)	Standard Unit Cost
Direct materials (clay)	1.60 lbs.	$1.7 per lb.	$2.72
Direct labor	1.60 hrs.	$12.00 per lb.	19.20
Variable manufacturing overhead    (based on direct labor hours)	1.60 hrs.	$1.1 per lb.	1.76
Fixed manufacturing overhead ($253,000.00 ÷ 100,000.00 units)			2.2

Barley Hopp had the following actual results last year: 

 Number of units produced and sold         120,000

 Number of pounds of clay used             208,200

 Cost of clay                           $  333,120

  Number of labor hours worked             165,000

  Direct labor cost                     $2,343,000

 Variable overhead cost                 $  230,000

 Fixed overhead cost                    $ 285,000

 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

Solution

Material Price Variance	$         20,820.00	Favourable-F
Material quantity variance	$         27,540.00	Unfavourable-U
Total Material Variance	$           6,720.00	Unfavourable-U
Labor rate variance	$      363,000.00	Unfavourable-U
Labor Efficiency variance	$      324,000.00	Favourable-F
Total Labor variance	$         39,000.00	Unfavourable-U
Variable Overhead Rate Variance	$         48,500.00	Unfavourable-U
Variable Overhead Efficiency Variance	$         29,700.00	Favourable-F
Variable Overhead Spending Variance	$         18,800.00	Unfavourable-U

Working

		120000	Units
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct Material	208200	$       1.60	$       333,120.00
Direct labor	165000	$     14.20	$    2,343,000.00
Variable Overhead	165000	$       1.39	$       230,000.00

.

Standard DATA for		120000	Units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct Material	( 1.6 lbs x 120000 Units)=192000 lbs	$              1.70	$          326,400.00
Direct labor	( 1.6 Hour x 120000 Units)=192000 Hour	$           12.00	$      2,304,000.00
Variable Overhead	( 1.6 Hour x 120000 Units)=192000 Hour	$              1.10	$          211,200.00

.

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                    1.70	-	$                     1.60	)	x	208200
	20820
	Variance		$           20,820.00			Favourable-F
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	192000	-	208200	)	x	$              1.70
	-27540
	Variance		$           27,540.00			Unfavourable-U
Material Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$       326,400.00	-	$        333,120.00	)
	-6720
	Variance		$             6,720.00			Unfavourable-U
Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                  12.00	-	$                   14.20	)	x	165000
	-363000
	Variance		$        363,000.00			Unfavourable-U
Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	192000	-	165000	)	x	$           12.00
	324000
	Variance		$        324,000.00			Favourable-F
Labor Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$   2,304,000.00	-	$     2,343,000.00	)
	-39000
	Variance		$           39,000.00			Unfavourable-U
Variable Overhead Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                    1.10	-	$                     1.39	)	x	165000
	$       (48,500.00)
	Variance		$           48,500.00			Unfavourable-U
Variable Overhead Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	192000	-	165000	)	x	$              1.10
	$         29,700.00
	Variance		$           29,700.00			Favourable-F
Variable Overhead Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$       211,200.00	-	$        230,000.00	)
	-18800
	Variance		$           18,800.00			Unfavourable-U