Logistics Solutions provides order fulfillment services for dot.com merchants. T

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 company incurred a total of $13,630 in variable overhead costs According to the company's standards, 0.03 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $2.95 per direct labor-hour. Required: 1. According to the standards, what variable overhead cost should have been incurred to fill the orders for hours per item and overhead cost per hour to 2 decimal places.) Standard direct labor-hours per item Total direct labor-hours allowed Standard variable overhead cost per hour Total standard variable overhead cost Actual variable overhead cost incurred Total standard variable overhead cost Total variable overhead variance 2. Break down the difference computed in (1) above into a variable overhead rate variance and a variable overhead efficiency variance. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Variable overhead rate variance Variable overhead efficiency variance

Explanation / Answer

Standard varible OH cost = standard cost per oh * direct labour hour

Variance is diff between standard and actual. It is unfavourable in thi case as actual is higher than the standard

Actual OH rate = Actual H cost/ Total no of direct labiur hour

Actual labour hour per item = no of direct labour hour/ No of items

Negative sign indicates that it is unfavourable

No of items shipped 130000 Standard direct labour-hour per item 0.03 total direct labour allowed 3900 variable overhead cost per hour 2.95 Total standard variable OH cost 11505 Actual variable OH cost 13360 Total standard variable OH cost 11505 Total variable OH variance 1855

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.