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:

Required:
1.A Calculate the direct materials price, quantity, and total spending variances for Barley Hopp

1.B Calculate the direct labor rate, efficiency, and total spending variances for Barley Hopp.

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

Standard Quantity Standard Price (Rate) Standard Unit Cost Direct materials (clay) 1.70 lbs. $ 1.80 per lb. $ 3.06 Direct labor 1.70 hrs. $ 11.00 per hr. 18.70 Variable manufacturing overhead (based on direct labor hours) 1.70 hrs. $ 1.10 per hr. 1.87 Fixed manufacturing overhead ($420,500.00 ÷ 145,000.00 units) 2.90

Explanation / Answer

1a) Material price variance = (1.8*268200-455940) = 26820 F

Material quantity variance = (150000*1.7-268200)*1.80 = 23760 U

Material spending variance = 3060 F

1B) Labour rate variance = (11*195000-2827500) = 682500 U

Labour efficiency variance = (150000*1.7-195000)*11 = 660000 F

Labour spending variance = 22500 U

1c) Variable overhead rate variance = (1.1*195000-290000) = 75500 U

Variable overhead efficiency variance = (150000*1.7-195000)*1.1 = 66000 F

Variable overhead spending variance = 9500 U

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