PA9-1 Calculating Direct Material, Direct Labor, Variable Overhead Variances [LO

Question

PA9-1 Calculating Direct Material, Direct Labor, Variable Overhead Variances [LO 9-3, 9-4, 9-5] Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows Standard Standard Price Quantity 1.70 lbs. 1.80 per lb. 1.70 hrs. 10.00 per hr. .70 hrs.1.10 per hr Standard Unit Cost S 3.06 17.00 Rate) Direct materials (clay) Direct labor Variable manufacturing overhead (based on 1.87 direct labor hours) Fixed manufacturing overhead ($402,500.00 + 2.30 175,000.00 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 180,000 328,200 $623,580 225,000 $3,082,500 S 350,000 $ 400,000

Explanation / Answer

1 Direct materials price variance=623580-(328200*1.8)= $32820 U Direct materials quantity variance=1.8*(328200-180000*1.7)= $39960 U Direct material spending variance=623580-(180000*3.06)= $72780 U 2 Direct labor rate variance=3082500-(225000*10)= $832500 U Direct labor efficiency variance=10*(225000-180000*1.7)= $810000 F Direct labor spending variance=3082500-(180000*17)= $22500 U 3 Variable overhead rate variance=350000-(225000*1.1)= $102500 U Variable overhead efficiency variance=1.1*(225000-180000*1.7)= $89100 F Variable overhead spending variance=350000-(180000*1.87)= $13400 U

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