Question

Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows: Standard Quantity 1.60 lbs. Standard Unit Cost $ 2.72 Standard Price (Rate) $ 1.70 per lb. $10.00 per hr. 1.10 per hr. Direct materials (clay) Direct labor Variable manufacturing overhead (based on direct labor hours) Fixed manufacturing overhead ($273,000.00 105,000.00 units) 1.60 hrs 1,60 hrs 16.00 1.76 2.60 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 110,000 188,200 301,120 155,000 $1,798,000 $ 210,000 $ 275,000 Required: 1. Calculate the direct materials price, quantity, and total spend ing variances for Barley Hopp. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable and "U" for unfavorable.) Direct Materials Price Variance Direct Materials Quantity Variance Direct Materials Spending Variance

Answer 1

Solution

Material Price Variance	$         18,820.00	Favourable-F
Material quantity variance	$         20,740.00	Unfavourable-U
Total Material spending Variance	$           1,920.00	Unfavourable-U
Labor rate variance	$      248,000.00	Unfavourable-U
Labor Efficiency variance	$      210,000.00	Favourable-F
Total Labor spending variance	$         38,000.00	Unfavourable-U
Variable Overhead Rate Variance	$         39,500.00	Unfavourable-U
Variable Overhead Efficiency Variance	$         23,100.00	Favourable-F
Variable Overhead Spending Variance	$         16,400.00	Unfavourable-U

Working

Actual DATA for		110000	Units
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct Material	188200	$       1.60	$       301,120.00
Direct labor	155000	$     11.60	$    1,798,000.00
Variable Overhead	155000	$       1.35	$       210,000.00

.

Standard DATA for		110000	Units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct Material	( 1.6 lb x 110000 Units)=176000 lb	$                   1.70	$          299,200.00
Direct labor	( 1.6 Hour x 110000 Units)=176000 Hour	$                10.00	$      1,760,000.00
Variable Overhead	( 1.6 Hour x 110000 Units)=176000 Hour	$                   1.10	$          193,600.00

.

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                    1.70	-	$                     1.60	)	x	188200
	18820
	Variance		$           18,820.00			Favourable-F
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	176000	-	188200	)	x	$              1.70
	-20740
	Variance		$           20,740.00			Unfavourable-U
Material Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$       299,200.00	-	$        301,120.00	)
	-1920
	Variance		$             1,920.00			Unfavourable-U
Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                  10.00	-	$                   11.60	)	x	155000
	-248000
	Variance		$        248,000.00			Unfavourable-U
Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	176000	-	155000	)	x	$           10.00
	210000
	Variance		$        210,000.00			Favourable-F
Labor Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$   1,760,000.00	-	$     1,798,000.00	)
	-38000
	Variance		$           38,000.00			Unfavourable-U
Variable Overhead Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                    1.10	-	$                     1.35	)	x	155000
	$       (39,500.00)
	Variance		$           39,500.00			Unfavourable-U
Variable Overhead Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	176000	-	155000	)	x	$              1.10
	$         23,100.00
	Variance		$           23,100.00			Favourable-F
Variable Overhead Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$       193,600.00	-	$        210,000.00	)
	-16400
	Variance		$           16,400.00			Unfavourable-U