Exercise 8-6 Variable Overhead Variances [LO6] Order Up, Inc., provides order fu

Question

Exercise 8-6 Variable Overhead Variances [LO6]

Order Up, Inc., provides order fulfillment services for dot.com merchants. The company maintains warehouses that stock items carried by its dot.com clients. When a client receives an order from a customer, the order is forwarded to Order Up, which pulls the item from storage, packs it, and ships it to the customer. The company uses a predetermined variable overhead rate based on direct labor-hours.

    In the most recent month, 110,000 items were shipped to customers using 5,400 direct labor-hours. The company incurred a total of $15,930 in variable overhead costs.

     According to the company

Order Up, Inc., provides order fulfillment services for dot.com merchants. The company maintains warehouses that stock items carried by its dot.com clients. When a client receives an order from a customer, the order is forwarded to Order Up, which pulls the item from storage, packs it, and ships it to the customer. The company uses a predetermined variable overhead rate based on direct labor-hours.

Explanation / Answer

1-
(a) - 110,000 items x .05 DLR = 5,500 std hrs x 3.00 = 15,500

(b) 15,930 Actual OH vs.15,500 Stnd OH = 430 U

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