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 Quantity Standard Price (Rate) Standard Unit Cost
Direct materials (clay) 1.60 lbs. $ 1.70 per lb. $ 2.72
Direct labor 1.60 hrs. $ 10.00 per hr. 16.00
Variable manufacturing overhead (based on direct labor hours) 1.60 hrs. $ 1.10 per hr. 1.76
Fixed manufacturing overhead ($273,000.00 ÷ 105,000.00 units) 2.60

Barley Hopp had the following actual results last year:

Number of units produced and sold 110,000
Number of pounds of clay used 188,200
Cost of clay $ 301,120
Number of labor hours worked 155,000
Direct labor cost $ 1,798,000
Variable overhead cost $ 210,000
Fixed overhead cost $ 275,000

Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows: Standard Standard Price Quantity 1.60 bs. S 1.70 per lb 1.60 hrs. S1000 per hr. Standard Unit Cost 2.12 16.00 (Ratc) Direct matcrials (clay) Direct laber Vanable manufacturing overncad (based on .6 rs. 110 per hr. 1.T6 direct labor hours) Fixed manufacturing overhead ($273,000.00 2.50 105,000.00 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 Vanable 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 Varianoc Direct Malerials Quanlity Variarice Direct Materials Spending Variance

Explanation / Answer

Answer

STANDARD

Qty

Rate ($)

Amount ($)

Direct Material

176000

1.7

299200

Direct Labor

176000

10

1760000

Variable manufacturing overhead

176000

1.1

193600

Total cost

2252800

Total Units

110000

Standard Cost per Unit

20.48

ACTUAL

Qty

Rate ($)

Amount ($)

Direct Material

188200

1.6

301120

Direct Labor

155000

11.6

1798000

Variable manufacturing overhead

155000

1.35483871

210000

Total cost

2309120

Total Units

110000

Actual Cost per Unit

20.992

Material Price Variance

=

(Standard Rate

-

Actual Rate)

x

Actual material Quantity

Material Price Variance

=

1.7

-

1.6

x

188200

Material Price Variance

=

0.1 x 188200

Material Price Variance

=

$18820 Favourable - F

Material Quantity Variance

=

(Standard Quantity

-

Actual Quantity)

x

Standard rate

Material Quantity Variance

=

176000

-

188200

x

1.7

Material Quantity Variance

=

- 12200 x $1.7

Material Quantity Variance

=

$20740 Unfavourable - U

Material Spending Variance = 18820 F + 20740 U = 1920 Unfavourable

Labor Rate Variance

=

(Standard rate

-

Actual Rate)

x

Actual labor hours

Labor Rate Variance

=

10

-

11.6

x

155000

Labor Rate Variance

=

- $1.6 x 155000

Labor Rate Variance

=

$ 248000 Unfavorable - U

Labor Efficiency Variance

=

(Standard hours

-

Actual hours)

x

Standard rate

Labor Efficiency Variance

=

176000

-

155000

x

10

Labor Efficiency Variance

=

21000 x $10

Labor Efficiency Variance

=

$210000 Favourable - F

Labor Spending Variance = 248000 U + 210000 F = 38000 Unfavourable

Variable Overhead rate Variance

=

(Standard rate

-

Actual Rate)

x

Actual labor hours

Variable Overhead rate Variance

=

1.1

-

1.35483871

x

155000

Variable Overhead rate Variance

=

- 0.2548…. X 155000

Variable Overhead rate Variance

=

$ 39500 Unfavorable - U

Variable Overhead Efficiency variance

=

(Standard hours

-

Actual hours)

x

Standard rate

Variable Overhead Efficiency variance

=

176000

-

155000

x

1.1

Variable Overhead Efficiency variance

=

21000 x $1.1

Variable Overhead Efficiency variance

=

$23100 Favourable - F

Variable Overhead spending Variance = 39500 U + 23100 F = 16400 Unfavourable

STANDARD

Qty

Rate ($)

Amount ($)

Direct Material

176000

1.7

299200

Direct Labor

176000

10

1760000

Variable manufacturing overhead

176000

1.1

193600

Total cost

2252800

Total Units

110000

Standard Cost per Unit

20.48

ACTUAL

Qty

Rate ($)

Amount ($)

Direct Material

188200

1.6

301120

Direct Labor

155000

11.6

1798000

Variable manufacturing overhead

155000

1.35483871

210000

Total cost

2309120

Total Units

110000

Actual Cost per Unit

20.992

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