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:

Barley Hopp had the following actual results last year:

3. Calculate the variable overhead rate, efficiency, and total spending variances for Barley Hopp.

Variable Overhead Rate

VarianceVariable Overhead Efficiency

VarianceVariable Overhead Spending Variance

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. $ 11.00 per hr. 17.60 Variable manufacturing overhead (based on direct labor hours) 1.60 hrs. $ 1.10 per hr. 1.76 Fixed manufacturing overhead ($275,000.00 ÷ 110,000.00 units) 2.50

Barley Hopp had the following actual results last year:

Number of units produced and sold 115,000 Number of pounds of clay used 198,200 Cost of clay $ 317,120 Number of labor hours worked 160,000 Direct labor cost $ 2,080,000 Variable overhead cost $ 220,000 Fixed overhead cost $ 280,000

3. Calculate the variable overhead rate, efficiency, and total spending variances for Barley Hopp.

Variable Overhead Rate

VarianceVariable Overhead Efficiency

VarianceVariable Overhead Spending Variance

Explanation / Answer

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

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

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

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