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)	1.70	lbs.	$	1.80	per lb.	$	3.06
Direct labor	1.70	hrs.	$	10.00	per hr.		17.00
Variable manufacturing overhead (based on direct labor hours)	1.70	hrs.	$	1.10	per hr.		1.87
Fixed manufacturing overhead ($402,500.00 ÷ 175,000.00 units)							2.30

Barley Hopp had the following actual results last year:

Number of units produced and sold		180,000
Number of pounds of clay used		328,200
Cost of clay	$	623,580
Number of labor hours worked		225,000
Direct labor cost	$	3,082,500
Variable overhead cost	$	350,000
Fixed overhead cost	$	400,000

Required:
1. Calculate the direct materials price, quantity, and total spending variances for Barley Hopp.
2. Calculate the direct labor rate, efficiency, and total spending variances for Barley Hopp.
3. Calculate the variable overhead rate, efficiency, and total spending variances for Barley Hopp.

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, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

	Direct Materials Price Variance Direct Materials Quantity Variance Direct Materials Spending Variance

Answer 1

Standard DATA for	180000	Units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct Material	( 1.7 lbs x 180000 Units)=306000 lbs	$              1.80	$550800
Direct labor	( 1.7 Hour x 180000 Units)=306000 Hour	$           10.00	$3060000
variable oh	(1.70hour X 180000 unit )=306000hour	$1.10	$ 336600

.Working

	180000	Units
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct Material	328,200	$            1.90	$623580
Direct labor	225000	$         13.70	$3082500
variable overhead	225000	$ 1.56	$350000

.

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                    1.80	-	$                     1.90	)	x	328200
	32820
	Variance		$ -32820			unFavourable-U
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	306000	-	328200	)	x	$              1.80
	-39960
	Variance		$-39960			Unfavourable-U
Material Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$ 550800	-	$ 623580	)
	-72780
	Variance		$72780			UnFavourable-U

Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$ 10	-	$ 13.70	)	x	225000
	-832500
	Variance		$832500			Unfavourable-U
Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	306000	-	225000	)	x	$ 10
	810000
	Variance		$ 810000			Favourable-F
Labor Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$3060000	-	$3082500	)
	-22500
	Variance		$22500			Unfavourable-U

.c)

Variable Overhead Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$ 1.10	-	$ 1.56	)	x	225000
	-103500
	Variance		$103500			Unfavourable-U
Variable Overhead Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	306000	-	225000	)	x	$ 1.10
	89100
	Variance		$ 89100			Favourable-F
Labor Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$336600	-	$350000	)
	-13400
	Variance		$13400			Unfavourable-U