value: 1.00 points Logistics Solutions provides order fulfillment services for d
ID: 2540894 • Letter: V
Question
value: 1.00 points 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 froma 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, 120,000 items were shipped to customers using 2,300 direct labor-hours. The company incurred a total of $7,360 in variable overhead costs. and the variable overhead rate is $3.25 per direct labor-hour. Required According to the company's standards, 0.02 direct labor-hours are required to fulfill an order for one item 1. According to the standards, what variable overhead cost should have been incurred to fill the orders for the 120,000 items? How much does this differ from the actual variable overhead cost? (Round labor- hours per item and overhead cost per hour to 2 decimal places. Number of items shipped 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 varianceExplanation / Answer
1. According to standard, standard cost and actual variance and variance :
2. Variable overhead rate variance = (3.25*2300-7360) = 115 F
Variable overhead efficiency variance = (120000*.02-2300)3.25 = 325 F
No of items shipped 120000 Standard direct labour hour per item 0.02 Total direct labour hour allowed 2400 Standard variable overhead cost per hour 3.25 Total standard variable overhead cost 7800 Actual variable overhead cost incurred 7360 Total standard variable overhead cost 7800 Total variable overhead variance 440 FRelated Questions
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