3 Logistics Solutions provices or carried by its dot.com clients. When a client

Question

3 Logistics Solutions provices or 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 t on direct labor-hours. der fulfillment services for dot.com merchants. The compy aintains warehouses that stock items a he customer. The company uses a predetermined variable overhead rate based In the most recent month, 180,000 items were shipped to customers using 7700 direct labor-hours. Th company incurred a total of 2 04:5059 $26,180 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 $3.45 per direct labor-hour Required 1. What is the standard labor-hours allowed (SH) to ship 180,000 items to customers? 2. What is the standard variable overhead cost allowed (SH SR) to ship 180,000 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 all 2 Standard variable overhead cost allowed 3. Variable overhead spending variance Variable overhead efficiency variance

Explanation / Answer

Calculate following :

1 Standard labour hour allowed (180000*0.03) 5400 2 Standard cost allowed (5400*3.45) 18630 3 Variable overhead spending variance (18630-26180) 7550 U 4 Variable overhead rate variance = (3.45*7700-26180) 385 F Variable overhead efficiency variance (5400-7700)*3.45 7935 U

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