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 per lb.	$2.72
	Direct Labor	14.00 per hour	22.40
	Variable Manufacturing overhead (based on direct labor hours)	1.30 per hr	2.08
	Fixed manufacturing overhead ($352,000/160,000 units)		2.20

Barley Hopp had the following actual results last year:

Number of units produced and sold		165,000
Number of pounds of clay used		298,200
Cost of clay	$	536,760
Number of labor hours worked		210,000
Direct labor cost	$	3,780,000
Variable overhead cost	$	320,000
Fixed overhead cost	$	355,000

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.

1.

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

2.

Direct Labor Rate Variance
Direct Labor Efficiency Variance
Direct Labor Spending Variance

3.

Variable Overhead Rate Variance
Variable Overhead Efficiency Variance
Variable Overhead Spending Variance

Answer 1

Note:

When actual material is more than the standard material it is a unfavourable variance and vice versa.

Note

if actual hours/cost/rate is more than the standard hours/cost/rate it is a unfavourable variances and vice versa.