Question

PA9-1 Calculating Direct Material, Direct Labor, Variable Overhead Variances [LO 9-3, 9-4, 9-5] Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows: Standard Standard Price Standard Quantity (Rate) Unit Cost Direct materials (clay) 1.70 lbs. $ 1.80 per Ib. $ 3.06 Direct labor 1.70 hrs. $13.00 per hr. 22.10 Variable manufacturing overhead (based on on 1.70 hrs. $ 1.10 per hr. 1.87 direct labor hours) Fixed manufacturing overhead ($276,000.00 + 2.30 120,000.00 units) Barley Hopp had the following actual results last year: Number of units produced and sold Number of pounds of clay used Cost of clay Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 125,000 218,200 $ 370,940 170,000 $ 2,805,000 $ 240,000 $ 300,000

Answer 1

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Answer 3 Part 3) 4 5 a) Variable overhead rate variance = actual overhead cost- (standard rate* actual hours) 6 = $ 240000 - (1.1*170000) 7 = $ 53000 Unfavourable 9 b) 10 Variable Overhead effeciency variance = (actual hours - standard hours) * standard rate 11 = (170000 - (125000*1.7)) *1.1 12 = $ 46750 Favourable 14 C) Variable overhead spending variance = Actual Overheads - standard overheads 15 = $ 240000 - (125000*1.7*1.1) 16 = $ 6250 Unfavourable 18 Thus the final answer 19 Variable Overhead Rate Variance 20 Variable Overhead Effeciency Variance 21 Variable Overhead Spending Variance 22 53000 U 46750 F 6250U