Question

Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows: Direct materials (clay) Direct labor Variable manufacturing overhead (based on direct labor hours) Fixed manufacturing overhead ($273,000.00 = 105,000.00 units) Standard Quantity 1.60 lbs. 1.60 hrs. 1.60 hrs. Standard Price (Rate) $ 1.70 per lb. $ 10.00 per hr. $ 1.10 per hr. Standard Unit Cost $ 2.72 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 spending 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 2. Calculate the direct labor rate, efficiency, and total spending 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 Labor Rate Variance Direct Labor Efficiency Variance Direct Labor Spending Variance

Answer 1

Materials Price Variance = (SP-AP) *AQ = (1.70-301,120/188,200)*188,200	18,820 F
Materials Quantity Variance = (SQ-AQ) *SP = (110,000*1.60 - 188,200)*1.70	20,740 U
Materials spending variance = 18,820 F + 20,740 U	1920 U

.

Labor Rate Variance = (SR-AR) *AH = (10-1,798,000/155,000)*155,000	248,000 U
Labor efficiency variance = (SH-AH) *SR = (110,000*1.60 - 155,000)*10	210,000 F
Labor spending variance = 248,000 U + 210,000 F	38,000 U

.

Voh rate variance = (SR-AR) *AH = (1.10-210,000/155,000)*155,000	39,500 U
Voh efficiency variance = (SH-AH) *SR = (110,000*1.60 - 155,000)*1.10	23,100 F
Voh spending variance = 39,500 U + 23,100 F	16,400 U