Barley Hopp, follows Inc., manufactures custom-ordered commemorative beer steins

Question

Barley Hopp, follows Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information Direct materials (clay) Direct labor Variable manufacturing overhead (based on direct labor hours) Fixed manufacturing overhead ($275,000.00 ÷ 110,000.00 Standard Quantity .60 Ibs 1.60 hrs 1.60 hrs Standard Price (Rate) $ 1.70 perlb. $11.00 per hr 1.10 per hr Standard Unit Cost 2.72 17.60 1.76 2.50 units) 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 115,000.00 198,200.00 $ 317,120.00 160,000.00 $2,080,000.00 $ 220,000.00 $ 280,000.00 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

Explanation / Answer

1)

Direct Materials price variance = (Actual price - Standard Price) *Actual Quantity

Direct Materials price variance = (317120/198200-1.70)*198200

Direct  Materials price variance = $ 19820 favorable

Direct Materials usage/quantity variance = (Actual Quantity Used- Standard Quantity)Standard Price

Direct Materials usage/quantity variance = (198200 - 1.6*115000)*1.70

Direct Materials usage/quantity variance = $ 24140 Unfavorable

Direct Materials Spending variance = ( Actual price*Actual Quantity - Standard Price*Standard Quantity)

Direct  Materials Spending variance = (317120 - 1.70*1.6*115000)

Direct  Materials Spending variance = $ 4320 Unfavorable

2)

Direct Labor rate variance = (Actual Rate-Standard Rate)*Actual Hour

Direct Labor rate variance = (2080000/160000- 11)*160000

Direct Labor rate variance = $ 320000 Unfavorable

Direct Labor efficiency variance = (Actual Hour-Standard Hour )Standard Rate

Direct Labor efficiency variance = (160000-115000*1.6)*11

Direct Labor efficiency variance = 264000 favorable

Direct Labor Spending variance = (Actual Rate*Actual Hour - Standard Rate* Standard Hour)

Direct Labor Spending variance = (2080000 - 11*1.6*115000)

Direct Labor Spending variance = $ 56000 Unfavorable

3)

Variable Overhead rate variance = (Actual Rate*Actual Hour -Standard Rate*Actual Hour )

Variable Overhead rate variance = (220000 - 1.1*160000)

Variable Overhead rate variance = $ 44000 Unfavorable

Variable Overhead efficiency variance =(Actual Hour-Standard Hour )Standard Rate

Variable Overhead efficiency variance = (160000-1.6*115000)*1.1

Variable Overhead efficiency variance = 26400 favorable

Variable Overhead Spending variance = (Actual Rate*Actual Hour - Standard Rate* Standard Hour)

Variable Overhead Spending variance = (220000 - 1.1*1.6*115000)

Variable Overhead Spending variance = $ 17600 Unfavorable

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