Question

Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows: Standard Quantity 1.60 lbs. 1.60 hrs. Standard Price (Rate) $ 1.78 per lb. $16.00 per hr. Standard Unit Cost $ 2.72 25.60 Direct materials (clay) Direct labor Variable manufacturing overhead (based on direct labor hours) Fixed manufacturing overhead (5364,500.00 + 135,000.00 units) 1.60 hrs. $ 1.20 per hr. 1.92 2.70 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 140,000 248,200 397, 120 185,000 $3,626,000 $ 270,000 $ 380,000 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

Requried 1 :
Actual direct materials rate = Actual direct materials cost / Actual direct materials quantity = 397120 / 248200	1.60
Direct materials price variance = ( Actual price - Standard price ) * Actual quantity = ( 1.60 - 1.70 ) * 248200	-24820	F
Standard direct materials quantity for actual production = Standard direct materials quantity per unit * Actual unit production = 1.60 * 140000	224000
Direct materials quantity variance = ( Actual quantity - Standard quantity ) * Standard rate = ( 248200 - 224000 ) * 1.70	41140	U
Standard direct materials cost for actual production = Standard direct materials quantity for Actual production * Standard rate = 224000 * 1.70	380800
Direct materials spending variance = Actual cost - Standard cost = 397120 - 380800	16320	U
Required 2 :
Actual direct labor rate = Actual direct labor cost / Actual direct labor hours = 3626000 / 185000	19.60
Direct labor rate variance = ( Actual rate - Standard rate ) * Actual hours = ( 19.60 - 16.00 ) * 185000	666000	U
Standard direct labor hours for actual production = Standard direct labor hours per unit * Actual units production = 1.60 * 140000	224000
Direct labor efficiency variance = ( Actual hours - Standard hours ) * Standard rate = ( 185000 - 224000 ) * 16.00	-624000	F
Standard direct labor cost for actual production = Standard direct labor hours for actual production * Standard rate = 224000 * 16.00	3584000
Direct labor spending variance = Actual cost - Standard cost = 3626000 - 3584000	42000	U
Required 3 :
Actual variable overhead rate = Actual variable overhead cost / Actual direct labor hours = 270000 / 185000	1.46
Variable overhead rate variance = ( Actual rate - Standard rate ) * Actual hours = ( 1.46 - 1.20 ) * 185000	48100	U
Variable overhead efficiency variance = ( Actual hours - Standard hours ) * Standard rate = ( 185000 - 224000 ) * 1.20	-46800	F
Standard variable cost for actual production = Standard direct labor hours for actual production * Standard rate = 224000 * 1.20	268800
Variable overhead spending variance = Actual cost - Standard cost = 270000 - 268800	1200	U