Logistics Solutions provides order fulfillment services for dot.com merchants. T
ID: 2516375 • Letter: L
Question
Logistics Solutions 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 Logistics Solutions, 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, 205,000 items were shipped to customers using 9,200 direct labor-hours. The company incurred a total of $33,580 in variable overhead costs According to the company's standards, 0.02 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $3.70 per direct labor-hour Required: 1. What is the standard labor-hours allowed (SH) to ship 205,000 items to customers? 2. What is the standard variable overhead cost allowed (SH SR) to ship 205,000 items to customers? 3. What is the variable overhead spending variance? 4. What is the variable overhead rate variance and the variable overhead efficiency variance? (For requirements 3 and 4, indicate the effect of each variance by selecting "F for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do no round intermediate calculations.) 1. Standard quantity of labor-hours allowed 2. Standard variable overhead cost allowed 3. Variable overhead spending variance 4. Variable overhead rate variance Variable overhead oficioncy varianceExplanation / Answer
Answer
1.Standard quantity of Labor Hour allowed = 205000 x 0.02 D:H = 4100
2. Standard variable Overhead cost allowed = 4100 DLH x $3.7 per DLH = $15,170
Answer for part 3, 4 and 5
Variable Overhead Rate Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Labor Hours
(
$ 3.70
-
$ 3.65
)
x
9200
460
Variance
460
Favourable-F
Variable Overhead Efficiency Variance
(
Standard Hours
-
Actual Hours
)
x
Standard Rate
(
4100
-
9200
)
x
$ 3.70
-18870
Variance
18870
Unfavourable-U
Variable Overhead Spending Variance
(
Standard Cost
-
Actual Cost
)
(
$ 15,170.00
-
$ 33,580.00
)
-18410
Variance
18410
Unfavourable-U
1.Standard Labor Hour allowed = 6600 meals x 0.3 DLH = 1980 DLHs
2. Standard Labor cost allowed = 1980 DLH x $13 per DLH = $25,740
Answer 3,4 and 5 below
Labor Rate Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Labor Hours
(
$ 13.00
-
$ 14.00
)
x
1950
-1950
Variance
1950
Unfavourable-U
Labour Efficiency Variance
(
Standard Hours
-
Actual Hours
)
x
Standard Rate
(
1980
-
1950
)
x
$ 13.00
390
Variance
390
Favourable-F
Labor Spending Variance
(
Standard Cost
-
Actual Cost
)
(
$ 25,740.00
-
$ 27,300.00
)
-1560
Variance
1560
Unfavourable-U
Variable Overhead Rate Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Labor Hours
(
$ 3.70
-
$ 3.65
)
x
9200
460
Variance
460
Favourable-F
Variable Overhead Efficiency Variance
(
Standard Hours
-
Actual Hours
)
x
Standard Rate
(
4100
-
9200
)
x
$ 3.70
-18870
Variance
18870
Unfavourable-U
Variable Overhead Spending Variance
(
Standard Cost
-
Actual Cost
)
(
$ 15,170.00
-
$ 33,580.00
)
-18410
Variance
18410
Unfavourable-U
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