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.	$	16.00	per hr.		25.60
Variable manufacturing overhead (based on direct labor hours)	1.60	hrs.	$	1.20	per hr.		1.92
Fixed manufacturing overhead ($364,500.00 ÷ 135,000.00 units)							2.70

Barley Hopp had the following actual results last year:

Number of units produced and sold		140,000
Number of pounds of clay used		248,200
Cost of clay	$	397,120
Number of labor hours worked		185,000
Direct labor cost	$	3,626,000
Variable overhead cost	$	270,000
Fixed overhead cost	$	380,000

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.)



2. Calculate the direct labor rate, efficiency, 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.)



3. Calculate the variable overhead rate, efficiency, and total spending variances for Barley Hopp. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable/Overapplied and "U" for unfavorable/underapplied.)

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)	1.6	lbs.	$	1.70	per lb.	$	2.72
Direct labor	1.6	hrs.	$	10	per hr.		16.00
Variable manufacturing overhead (based on direct labor hours)	1.6	hrs.	$	1.1	per hr.		1.76
Fixed manufacturing overhead ($273,000 ÷ 105,000 units)							2.60

Barley Hopp had the following actual results last year:

Number of units produced and sold		110,000
Number of pounds of clay used		188,200
Cost of clay	$	301,120
Number of labor hours worked		155,000
Direct labor cost	$	1,798,000
Variable overhead cost	$	210,000
Fixed overhead cost	$	275,000

Required:
1. Calculate the fixed overhead spending variance for Barley Hopp. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable,"U" for unfavorable.)



2. Calculate the fixed overhead volume variance for Barley Hopp. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable,"U" for unfavorable.)



3. Calculate the total over- or underapplied fixed manufacturing overhead for Barley Hopp. (Do not round your intermediate calculations.)

Answer 1

ans 1
Direct Material Price Variance	24820	F
AQ*(AR-SR)	-24820
397120-(248200*1.7)
Direct material Qty varaince	41140	U
SR*(AQ-SQ allowed)
1.7*(248200-(140000*1.6))
Total spending variance	16320	U
41140-24820
ans 2
Labor rate variance	248000	U
(AH*AR)-(AH*SR)
1798000-(155000*10)
Labor efficiency variance	690000	F
SR*(AH-SH allowed)	-690000
10*(155000-(140000*1.6))
Total spending variance	442000	F
690000-248000
ans 3
Variable overhead spending variance
(AH*AR)-(AH*SR)	39500	U
210000-(155000*1.1)
Variable overhead efficiency variance	75900	F
SR*(AH-SH allowed)	-75900
1.1*(155000-(140000*1.6))
Total spending variance	36400	F
79500-39500
ans 1
Fixed overhead spending variance	2000	F
Budgetd overhead-actual overhead
273000-275000
Volume variance	11000	U
Absorbed-Budgeted fixed overhead
(110000*2.6)-275000
ans 3
actual	273000
Applied (110000*2.6)	286000
Overapplied	13000