PA9-1 Calculating Direct Material, Direct Labor, Variable Overhead Variances [LO

Question

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 Unit Cost 3.06 23.80 Quantity (Rate) Direct materials (clay) Direct labor Variable manufacturing overhead (based on 1.70 lbs. 1.80 per lb. 1.70 hrs. 14.00 per hr on.70 hrs. 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 $680,580 240,000 $4,680,000 380,000 $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.) Direct Materials Price Variance Direct Materials Quantity Variance Direct Materials Spending Variance

Explanation / Answer

Standard Actual Particulars Qty/ hours Rate amount Qty/ hours Rate amount Materials               331,500.00                      1.80         596,700.00         358,200.00                      1.90         680,580.00 Labour               331,500.00                    14.00      4,641,000.00         240,000.00                    19.50      4,680,000.00 Overhead               331,500.00                      1.10         364,650.00         240,000.00                  1.5833         380,000.00 Actual output               195,000.00 Materials reqd (195000*1.7)               331,500.00 Labour hrs reqd (195000*1.7)               331,500.00 Direct material spending var = 596700 - 680580 Direct material spending var = 83,880 U DMPV = (SP-AP)*AQ purchased DMPV = (1.8 - 1.9) 358200 DMPV = 35,820 U DMQV= (SQ-AQ)SP DMQV= (331500 - 358200)1.80 DMQV= 48,060 U DLRV= (SR-AR)AH DLRV= (14 - 19.50)240,000 DLRV= 1,320,000 U DLEV = (SH-AH)SR DLEV = (331,500 -240,000)14 DLEV = 1,281,000 F Direct Labour spending var = 4641,000 - 4680,000 Direct Labour spending var = 39,000 U VORV = (SR-AR)AH VORV = (1.1 - 1.5833)240,000 VORV = 116,000 U VOEV = (SH-AH)SR VOEV = (331,500 - 240000)1.10 VOEV = 100,650 F Variable overhead spending variance =364,650 - 380,000 Variable overhead spending variance =15,350 U

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