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 PriceStandard Quantity 1.70 lbs.1.80 per lb. 1.70 hrs. $14.00 per hr 1.70 hrs. (Rate) Direct materials (clay) Direct labor Variable manufacturing Unit Cost $ 3.06 23.80 overhead (based on 1.10 per hr 1.87 direct labor hours) Fixed manufacturing overhead ($456,000.00+ 2.40 190,000.00 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 195,000 358,200 S 680,580 240,000 $4,680,000 380,000 S 430,000 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.)

Explanation / Answer

1. Materials price variance = (Standard price - actual price) x Material purchased
= {$1.80 - ($680,580/ 358,200)} x 358,200 = $35,820 Unfavorable

Materials quantity variance = (Standard quantity - actual quantity used) x standard price
= {(195,000 x 1.70) - 358,200} x $1.80 = $48,060 Unfavorable

Materials spending variance = Standard cost - Actual cost
= 195,000 x 1.70 x $1.80 - $680,580 = $83,880 Unfavorable

2. Labor rate variance = (Standard rate - actual rate) x Actual hours used
= {$14.00 - ($4,680,000 / 240,000)} x 240,000 = $1,320,000 Unfavorable

Labor efficiency variance = (Standard hours - actual hours) x Standard rate
= {(1.70 x 195,000) - 240,000} x $14.00 = $1,281,000 Favorable

Labor spending variance = Standard cost - Actual cost
= 195,000 x 1.70 x $14.00 - $4,680,000 = $39,000 Unfavorable

3. Variable overhead rate variance = (Standard rate - actual rate) x Actual hours used
= {$1.10 - ($380,000 / 240,000)} x 240,000 = $116,000 Unfavorable

Variable overhead efficiency variance = (Standard hours - actual hours) x Standard rate
= {(1.70 x 195,000) - 240,000} x $1.10 = $100,650 Favorable

Variable overhead spending variance = Standard cost - Actual cost
= 195,000 x 1.70 x $1.10 - $380,000 = $15,350 Unfavorable

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