value: 3.00 points PA9-1 Calculating Direct Material, Direct Labor, Variable Ove
ID: 2529687 • Letter: V
Question
value: 3.00 points 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 Standard Quantity (Rate) 1.70 lbs. $1.80 per lb. S 3.06 1.70 hrs. $10.00 per hr. 17.00 Unit Cost Direct materials (clay) Direct labor Variable manufacturing overhead (based on direct 1.70 hrs. labor hours) 1.10 per hr. 1.87 Fixed manufacturing overhead (S392,000.00140,000.00 units) 2.80 Barley Hopp had the following actual results last year Number of units produced and 145.000 sold Number of pounds of clay used Cost of clay Number of labor hours worked Direct labor cost Variable overnead cost Fixed overhead cost 258,200 $ 438,940 190,000 $2,508,000 $ 280,000 $ 410,000 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 Variance Direct Materials Quantity Variance Direct Materials Spending Variance 2. Calculate the direct labor rate, efficiency, 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 Labor Rate Variance Direct Labor Efficiency Variance Direct Labor Spending Variance 3. Calculate the variable overhead rate, efficiency, and total spending variances for Barley Hopp. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F for favorablelOverapplied and "U" for unfavorable underapplied.) Variable Overhead Rate Variance Variable Overhead Efficiency Variance Variable Overhead Spending VarianceExplanation / Answer
Solution 1:
Standard Price of Clay = $1.80 per pound
Actual Price of Clay = $438,940/ 258200 = $1.70 per pound
Standard Qty of Clay = 145,000 units*1.7= 246,500 pounds
Actual Qty of Clay consumed = 258,200 pounds
Material Price Variance = (SP – AP) * AQ = (1.80 – 1.70) * 258200 = $25,820 (F)
Material Qty Variance = (SQ – AQ) * SP = (246500-258200)*1.8 = $21,060 (U)
Material Spending Variance = $25,820 F + (21,060 U) = $4,760 F
Solution 2:
Standard Rate of Labor= $10 per hour
Actual Rate of Labor =2,508,000/190,000 = $13.2 per hour
Standard Hours = 145000 units * 1.70 = 246,500 hours
Actual Hours= 190000 hours
Labor Rate Variance = (SR – AR) * AH = (10 – 13.20) * 190,000 = $608,000 (U)
Labor efficiency Variance = (SH– AH) * SR = (246500-190000)*10 = $565,000 (F)
Labor Spending Variance = $608000 U + $565000 F = $43,000 U
Solution 3:
Standard Rate of Variable Overhead = $1.10 per hour
Actual Price of Labor =280,000/190,000 = $1.47 per hour
Standard Hours = 145000 units * 1.70 = 246,500 hours
Actual Hours= 190000 hours
Variable Overhead Rate Variance = (SR – AR) * AH = (1.10 – 1.47) * 190,000 = $70,300 (U)
Variable overhead efficiency Variance = (SH– AH) * SR = (246500-190000)*1.10 = $62,150 (F)
Variable overhead Spending variance = $70,300 U + $62,150 F = $8,150 U
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