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

Question

Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows: Standard Standard Price Quantity 1.60 lbs. 1.70 per lb. 1.60 hrs. 11.00 per hr Standard Unit Cost S 2.72 17.60 1.76 (Rate) Direct materials (clay) Direct labor Variable manufacturing overhead based on1.60 hrs. 1.10 per hr direct labor hours) Fixed manufacturing overhead ($275,000.00+ 2.50 110,000.00 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 115,000 198,200 $ 317,120 160,000 $2,080,000 $ 220,000 $ 280,000 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

Explanation / Answer

Solution:

Part 1

Direct Material Price Variance

Actual Price (AP) ($317,120 / 198,200)

$1.60

per lb

Standard Price (SP)

$1.70

per lb

Variance or Difference in Price

$0.10

per yard

x Actual Quantity PURCHASED

198200

lbs

Material Price Variance

$19,820

Favorable

Direct Material Quantity Variance

Standard Quantity Allowed for actual production:

Actual Production/Activity

115000

Units

x Allowed Standard Quantity Per Unit

1.6

lb

Total Standard Quantity Allowed for actual production (SQAP)

184000

lbs

Actual Quantity USED (AQU)

198200

lbs

Variance or Difference in Quantity

14200

lbs

x Standard Price (SP)

$1.70

per yard

Material Quantity Variance

$24,140

Unfavorable

Direct Material Spending Variance

Direct material price variance

$19,820

Favorable

Direct Material Quantity Variance

$24,140

Unfavorable

Direct Material Spending Variance

$4,320

Unfavorable

Part 2

Labor Rate Variance

Actual Hourly Rate (AHR) (2080,000 / 160,000)

$13.00

Per Hour

Standard Hourly Rate (SHR)

$11.00

Per Hour

Variance or Difference in Rate

$2.0000

Per Hour

x Actual Labor Hours worked

160000

Hours

Labor Rate Variance

$320,000

Unfavorable

Labor Quantity / Efficiency Variance

Standard Hours Allowed for actual production:

  Actual Production

115000

Units

x Allowed Standard Hours Per Unit

1.6

hours

Total Standard Hours Allowed for actual production (SHAP)

184000

hours

Actual Labor Hours Worked (AH)

160000

hours

Variance or Difference in Hours

24000

hours

x Standard Hourly Rate (SHR)

$11.00

per hour

Labor Efficiency Variance

$264,000

Favorable

Direct Labor Spending Variance

Direct Labor Rate Variance

$320,000

Unfavorable

Direct Labor Efficiency Variance

$264,000

Favorable

Direct Labor Spending Variance

$56,000

Unfavorable

Part 3

Variable Overhead Spending/Rate Variance

Actual Hourly Variable Overhead Rate ($220,000 / 160,000 hrs)

1.38

Per Hour

Standard Hourly Variable Overhead Rate (SV) (Refer Note 1)

1.10

Per Hour

Variance or Difference in Rate

0.28

Per Hour

x Actual Direct Labor Hours Worked

160000

Hours

Variable Overhead Rate Variance

$44,000

Unfavorable

Variable Overhead Efficiency/Quantity Variance

Standard Hours Allowed for actual production:

Actual Production

115,000

Units

x Allowed Standard Hours Per Unit

1.6

hours

Total Standard Hours Allowed for actual production (SHAP)

184000

hours

Actual Direct Labor Hours (AH)

160000

Hours

Variance or Difference in Hours (SHAP - AH)

24000

hours

x Standard Hourly Variable Overhead Rate

$1.10

per hour

Variable Overhead Efficiency Variance

$26,400

Favorable

Variable Overhead Spending Variance

Variable Overhead Rate Variance

$44,000

Unfavorable

Variable Overhead Efficiency Variance

$26,400

Favorable

Variable Overhead Spending Variance

$17,600

Unfavorable

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Direct Material Price Variance

Actual Price (AP) ($317,120 / 198,200)

$1.60

per lb

Standard Price (SP)

$1.70

per lb

Variance or Difference in Price

$0.10

per yard

x Actual Quantity PURCHASED

198200

lbs

Material Price Variance

$19,820

Favorable

Direct Material Quantity Variance

Standard Quantity Allowed for actual production:

Actual Production/Activity

115000

Units

x Allowed Standard Quantity Per Unit

1.6

lb

Total Standard Quantity Allowed for actual production (SQAP)

184000

lbs

Actual Quantity USED (AQU)

198200

lbs

Variance or Difference in Quantity

14200

lbs

x Standard Price (SP)

$1.70

per yard

Material Quantity Variance

$24,140

Unfavorable

Direct Material Spending Variance

Direct material price variance

$19,820

Favorable

Direct Material Quantity Variance

$24,140

Unfavorable

Direct Material Spending Variance

$4,320

Unfavorable

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