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. | $1.7 per lb. | $2.72 |
Direct labor | 1.60 hrs. | $12.00 per lb. | 19.20 |
Variable manufacturing overhead (based on direct labor hours) | 1.60 hrs. | $1.1 per lb. | 1.76 |
Fixed manufacturing overhead ($253,000.00 ÷ 100,000.00 units) | 2.2 |
Barley Hopp had the following actual results last year:
Number of units produced and sold 120,000
Number of pounds of clay used 208,200
Cost of clay $ 333,120
Number of labor hours worked 165,000
Direct labor cost $2,343,000
Variable overhead cost $ 230,000
Fixed overhead cost $ 285,000
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.
Solution
Material Price Variance | $ 20,820.00 | Favourable-F |
Material quantity variance | $ 27,540.00 | Unfavourable-U |
Total Material Variance | $ 6,720.00 | Unfavourable-U |
Labor rate variance | $ 363,000.00 | Unfavourable-U |
Labor Efficiency variance | $ 324,000.00 | Favourable-F |
Total Labor variance | $ 39,000.00 | Unfavourable-U |
Variable Overhead Rate Variance | $ 48,500.00 | Unfavourable-U |
Variable Overhead Efficiency Variance | $ 29,700.00 | Favourable-F |
Variable Overhead Spending Variance | $ 18,800.00 | Unfavourable-U |
Working
120000 | Units | ||
Quantity (AQ) | Rate (AR) | Actual Cost | |
Direct Material | 208200 | $ 1.60 | $ 333,120.00 |
Direct labor | 165000 | $ 14.20 | $ 2,343,000.00 |
Variable Overhead | 165000 | $ 1.39 | $ 230,000.00 |
.
Standard DATA for | 120000 | Units | |
Quantity (SQ) | Rate (SR) | Standard Cost | |
[A] | [B] | [A x B] | |
Direct Material | ( 1.6 lbs x 120000 Units)=192000 lbs | $ 1.70 | $ 326,400.00 |
Direct labor | ( 1.6 Hour x 120000 Units)=192000 Hour | $ 12.00 | $ 2,304,000.00 |
Variable Overhead | ( 1.6 Hour x 120000 Units)=192000 Hour | $ 1.10 | $ 211,200.00 |
.
Material Price Variance | ||||||
( | Standard Rate | - | Actual Rate | ) | x | Actual Quantity |
( | $ 1.70 | - | $ 1.60 | ) | x | 208200 |
20820 | ||||||
Variance | $ 20,820.00 | Favourable-F | ||||
Material Quantity Variance | ||||||
( | Standard Quantity | - | Actual Quantity | ) | x | Standard Rate |
( | 192000 | - | 208200 | ) | x | $ 1.70 |
-27540 | ||||||
Variance | $ 27,540.00 | Unfavourable-U | ||||
Material Spending Variance | ||||||
( | Standard Cost | - | Actual Cost | ) | ||
( | $ 326,400.00 | - | $ 333,120.00 | ) | ||
-6720 | ||||||
Variance | $ 6,720.00 | Unfavourable-U | ||||
Labor Rate Variance | ||||||
( | Standard Rate | - | Actual Rate | ) | x | Actual Labor Hours |
( | $ 12.00 | - | $ 14.20 | ) | x | 165000 |
-363000 | ||||||
Variance | $ 363,000.00 | Unfavourable-U | ||||
Labour Efficiency Variance | ||||||
( | Standard Hours | - | Actual Hours | ) | x | Standard Rate |
( | 192000 | - | 165000 | ) | x | $ 12.00 |
324000 | ||||||
Variance | $ 324,000.00 | Favourable-F | ||||
Labor Spending Variance | ||||||
( | Standard Cost | - | Actual Cost | ) | ||
( | $ 2,304,000.00 | - | $ 2,343,000.00 | ) | ||
-39000 | ||||||
Variance | $ 39,000.00 | Unfavourable-U | ||||
Variable Overhead Rate Variance | ||||||
( | Standard Rate | - | Actual Rate | ) | x | Actual Labor Hours |
( | $ 1.10 | - | $ 1.39 | ) | x | 165000 |
$ (48,500.00) | ||||||
Variance | $ 48,500.00 | Unfavourable-U | ||||
Variable Overhead Efficiency Variance | ||||||
( | Standard Hours | - | Actual Hours | ) | x | Standard Rate |
( | 192000 | - | 165000 | ) | x | $ 1.10 |
$ 29,700.00 | ||||||
Variance | $ 29,700.00 | Favourable-F | ||||
Variable Overhead Spending Variance | ||||||
( | Standard Cost | - | Actual Cost | ) | ||
( | $ 211,200.00 | - | $ 230,000.00 | ) | ||
-18800 | ||||||
Variance | $ 18,800.00 | Unfavourable-U |
Barley Hopp, Inc., manufactures custom-ordered commemorativebeer steins. Its standard cost information follows:Barley Hopp, Inc.,...
Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows: Standard Price (Rate) 1.70 per lb $14.00 per hr. Standard Standard Unit Cost $2.72 22.40 Quantity 1.60 lbs. Direct materials (clay) 1.60 hrs. Direct labor Variable manufacturing overhead (based on direct 1abor hours) Fixed manufacturing overhead ($352,000.00 160,000.00 units) 2.08 $ 1.30 per hr. 1.60 hrs. 2.20 Barley Hopp had the following actual results last year Number of units produced and sold Number of pounds of clay...
Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows: Standard Standard Price Standard Quantity 1.60 lbs. (Rate) $ 1.70 per lb. $16.00 per hr. Unit Cost Direct materials (clay) 2.72 Direct labor 1,60 hrs. 25.60 Variable manufacturing overhead (based on direct labor hours) Fixed manufacturing overhead ($364,500.00 135,000.00 units) 1.20 per hr 1.60 hrs 1.92 2,70 Barley Hopp had the following actual results last year: Number of units produced and sold Number of pounds of clay...
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