Question

Barley Hopp, Incorporated, manufactures custom-ordered commemorative beer steins. Its standard cost information follows:

Standard Quantity Standard Price (Rate) Standard Unit Cost
Direct materials (clay) 1.60 pounds $ 1.70 per pound $ 2.72
Direct labor 1.60 hours $ 12.00 per hour 19.20
Variable manufacturing overhead (based on direct labor hours) 1.60 hours $ 1.10 per hour 1.76
Fixed manufacturing overhead ($253,000.00 ÷ 115,000.00 units) 2.20
Barley Hopp had the following actual results last year:

Number of units produced and sold 120,000
Number of pounds of clay purchased and 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:
Calculate the direct materials price, quantity, and total spending variances for Barley Hopp.
Calculate the direct labor rate, efficiency, and total spending variances for Barley Hopp.
Calculate the variable overhead rate, efficiency, and total spending variances for Barley Hopp.

Answer 1

The direct materials price variance is -$20,820, the direct materials quantity variance is $47,040, and the direct materials total spending variance is $26,220.

Step-by-step explanation:

To calculate the direct materials price variance, multiply the difference between the actual price and the standard price by the actual quantity used.

In this case, the actual price is $1.60 per pound and the standard price is $1.70 per pound.

The actual quantity used is 208,200 pounds.

Therefore, the direct materials price variance is"

($1.60 - $1.70) x 208,200

= -$20,820.

To calculate the direct materials quantity variance, multiply the difference between the actual quantity used and the standard quantity by the standard price.

In this case, the actual quantity used is 208,200 pounds and the standard quantity is 1.60 pounds per unit.

The standard price is $1.70 per pound.

Therefore, the direct materials quantity variance is:

(208,200 - (120,000 x 1.60)) x $1.70

= $47,040.

To calculate the direct materials total spending variance, simply add the price variance and the quantity variance.

In this case, the total spending variance is -$20,820 + $47,040

= $26,220.