Question

Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows:

	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

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.)

Answer 1

Standard DATA for		115000	Units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct Material	( 1.6 Lbs x 115000 Units)=184000 Lbs	$ 1.70	$ 312,800.00

Actual DATA for		115000	Units
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct Material	198200	$    1.60	$      317,120.00

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$   1.70	-	$ 1.60	)	x	198200
	19820
	Variance		$            19,820.00			Favorable-F

Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	184000	-	198200	)	x	$         1.70
	-24140
	Variance		$            24,140.00			Unfavorable-U

Material Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$           317,120.00	-	$          312,800.00	)
	4320
	Variance		$              4,320.00			Favorable-F

Summery

Material Price Variance	$      19,820.00	F
Material quantity variance	$      24,140.00	U
Total Material Variance	$        4,320.00	F