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 Quantity 170 ibs 1.70 hrs Standard Price (Rate) S1.80 per ib $14.00 per hr Standard Unit Cost S 3.06 23.80 Direct materials (clay) Direct labor Variable manutacturing overhead (based on direct labor hours) Fixed manufacturing overhead (3456,000.00 190,000.00 units) 1.70 hrs S1.10 per hr 187 2.40 Barley Hopp had the following actual results last year Number of units produced and sold Number of pounds of dlay used Cost of clay Number of labor hours worked Direct labor cost Variable overhead cost Fxed overhead cost 195,000 358.200 S 680,580 240,00D $4,680,000 S 380,000 S 430.000 Required 1. Calculate the direct materials price, quantity, and total spending variances for Barley Hopp. (Do not round your intermediate calculations. Indicate the offect of each variance by selecting "F" for favorable and "U for unfavorable.) Direct Materials Price Variance Direct Materials Quantity Variance Direct Materials Spending Variance

Answer 1

Solution

Material Price Variance	$         33,150.00	Unfavourable-U
Material quantity variance	$         48,060.00	Unfavourable-U
Total Material Variance	$         83,880.00	Unfavourable-U
Labor rate variance	$   1,320,000.00	Unfavourable-U
Labor Efficiency variance	$   1,281,000.00	Favourable-F
Total Labor variance	$         39,000.00	Unfavourable-U
Variable Overhead Rate Variance	$      116,000.00	Unfavourable-U
Variable Overhead Efficiency Variance	$      100,650.00	Favourable-F
Variable Overhead Spending Variance	$         15,350.00	Unfavourable-U

Working

Actual DATA for		195000	Units
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct Material	358200	$       1.90	$       680,580.00
Direct labor	240000	$     19.50	$    4,680,000.00
Variable Overhead	240000	$       1.58	$       380,000.00

.

Standard DATA for		195000	Units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct Material	( 1.7 pound x 195000 Units)=331500 pound	$                   1.80	$          596,700.00
Direct labor	( 1.7 Hour x 195000 Units)=331500 Hour	$                14.00	$      4,641,000.00
Variable Overhead	( 1.7 Hour x 195000 Units)=331500 Hour	$                   1.10	$          364,650.00

.

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                    1.80	-	$                     1.90	)	x	331500
	-33150
	Variance		$           33,150.00			Unfavourable-U
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	331500	-	358200	)	x	$              1.80
	-48060
	Variance		$           48,060.00			Unfavourable-U
Material Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$       596,700.00	-	$        680,580.00	)
	-83880
	Variance		$           83,880.00			Unfavourable-U
Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                  14.00	-	$                   19.50	)	x	240000
	-1320000
	Variance		$     1,320,000.00			Unfavourable-U
Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	331500	-	240000	)	x	$           14.00
	1281000
	Variance		$     1,281,000.00			Favourable-F
Labor Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$   4,641,000.00	-	$     4,680,000.00	)
	-39000
	Variance		$           39,000.00			Unfavourable-U
Variable Overhead Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                    1.10	-	$                     1.58	)	x	240000
	$     (116,000.00)
	Variance		$        116,000.00			Unfavourable-U
Variable Overhead Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	331500	-	240000	)	x	$              1.10
	$       100,650.00
	Variance		$        100,650.00			Favourable-F
Variable Overhead Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$       364,650.00	-	$        380,000.00	)
	-15350
	Variance		$           15,350.00			Unfavourable-U