Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its st
ID: 2445671 • Letter: B
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) 1.70 lbs. $ 1.80 per lb. $ 3.06 Direct labor 1.70 hrs. $ 10.00 per hr. 17.00 Variable manufacturing overhead (based on direct labor hours) 1.70 hrs. $ 1.10 per hr. 1.87 Fixed manufacturing overhead ($402,500.00 ÷ 175,000.00 units) 2.30 -------------------------------------------------------------------------------- Barley Hopp had the following actual results last year: Number of units produced and sold 180,000.00 Number of pounds of clay used 328,200.00 Cost of clay $ 623,580.00 Number of labor hours worked 225,000.00 Direct labor cost $ 3,082,500.00 Variable overhead cost $ 350,000.00 Fixed overhead cost $ 400,000.00
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 material price variance= $32,820 U
Direct material quantity variance = 39,960 U
Direct material spending var= 18,000 U
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.) DL rate variance=
DL efficiency variance=
DL labor spending var=
Calculate the variable overhead 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/Overapplied and "U" for unfavorable/underapplied.)
Variable OH rate=
variable overhead efficieny variance =
variable overhead spending variance=
Explanation / Answer
Direct Material Price variance = ( Actual rate - Standard rate ) x Actual quantity used
= ( $ 623580 / 328200 - $1.80) x 328200
= ( $1.9 - $1.8) x 328200
= $0.1 x 328200
= $32820 U -unfavourable since the actual price is higher than standard price.
Direct Material quantity variance = (Actual quantity used - standard quantity used ) x standard price
=( 328200 - 1.7 lbs x actual output ) x standard price
= (328200 -1.7 lbs x 180000 ) x $1.8 per lb
= (328200-306000) x $1.8 per lb
= $39960 U unfavourable since actual consumption is higher than standard usage
Direct Material spending variance = ( Actual price -Standard price ) x Actual units of output produced and sold
= ( $1.90-$1.80) x 180000 units
= $0.1 x 180000 units
= $ 18000 U unfavourable since actual rate is higher than standard rate
Direct labour rate variance = ( Actual rate - Standard rate ) x Actual labour hours used
= ( $3082500/225000 - $10) x 225000 labour hours
=( $13.7 - $10) x 225000 labour hours
= $3.7 x 225000 labour hours
= $832500 U unfavourable since actual rate is higher than standard rate.
Direct Labour efficiency variance = ( Actual hours used - standard hours used ) x Standard rate
= (225000 - 1.7 hours x actual output ) x $10 per hour
= ( 225000- 1.7 x 180000 ) x$10
= ( 225000-306000) x$10
= 81000 labour hours x $10
= $810000 F since actual hours used is less than standard hours.
Direct labor spending variance = ( Actual rate - standard rate ) x actual units of output produced and sold
= ( $13.7 - $10) x 180000 units
= $3.7 x 180000 units
= $666000 U un-favourable since actual rate is higher than standard rate
Variable rate variance = ( Actual rate - standard rate ) x actual direct labour hours used
= ( $350000/225000 labour hours - $1.10 ) x 225000 laour hours
= ( $1.56-$1.10 ) x 225000 labour hours
=$0.46 x 225000
= $ 103500 U - unfavourable since actual rate is higher than standard rate
Variable overhead efficiency variance = ( Actual labor hours used-standard labor hours ) x standard rate
= ( 225000- $1.7 per standar hour x actual units of output ) x $1.10
= ( 225000 - 306000) x $1.10
= $89100 F-favourable since actual hours is less than standard hours.
Variable overhead spending variance = ( Actual rate - Standard rate ) x Actual units of output produced and sold
= ($350000/225000 - $1.10 ) x 180000 units
= ( $1.56-$1.10 ) x 180000 units
= $$0.46 x 180000 units
= $8280 U - unfavourable since actual rate is higher than standard rate.
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