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 Standard Unit Quantity 1.60 lbs. 1.70 per lb 1.60 hrs. $11.00 per hr (Rate) Cost Direct materials (clay) Direct labor Variable manufacturing overhead (based on $2.72 17.60 1.76 1.60 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 S 317,120 160,000 $ 2,080,000 $ 220,000 $ 280,000

Explanation / Answer

2) Direct labour rate variance = (11*160000-2080000) = 320000 U

Direct labour efficiency variance = (115000*1.6-160000)*11 = 264000 F

Direct labour spending variance = (115000*17.60-2080000) = 56000 U

3) Variable overhead rate variance = (1.1*160000-220000) = 44000 U

Variable overhead efficiency variance = (115000*1.6-160000)*1.1 = 26400 F

Variable overhead spending variance = (115000*1.76-220000) = 17600 U

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