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, 190,000 items were shipped to customers using 8,300 direct labor-hours. The company incurred a total of $29,050 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 $3.55 per direct labor-hour. Required: 1. What is the standard labor-hours allowed (SH) to ship 190.000 items to customers? 2. What is the standard variable overhead cost allowed (SH SR) to ship 190,000 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 not 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 efficiency variance

Answer 1

Format Painter .00 0 rommal Clear Clipboard Font Alignment Formatting Table Styles Styles Sort & Find 82 Filter - Select Editing Number Cells A9 А B C - M 1 2 1 D E F G H J REQUIREMENT 1 Standard Quantity of Labor Hours Allowed = 190,000 Items * 0.03 Hours per Item Standard Quantity of Labor Hours Allowed = 5,700 Hours 3 4 5 2 REQUIREMENT 2 Standard Variable Overhead Cost Allowed = Standard Quantity of Labour Hours Allowed * Standard Variable Overhead Rate Standard Variable Overhead Rate per Hour = $ 3.55 Standard Quantity of Labor Hours Allowed = 5,700 Hours Standard Variable Overhead Cost Allowed = 5,700 * 3.55 9 10 13 1 16 Standard Variable Overhead Cost Allowed = $ 20,235 17 Sheet 1303 Sheet 1304 Working July Sheet 1305 Sheet 1306 Sheet 1307 Ready e 180

А В C E F G H K M REQUIREMENT 4 2 1 Variable Overhead Rate Variance = (Standard Variable Overhead Rate per Hour * Actual Hours) - (Actual Variable Overhead rate per 3 Hour * Actual hours) 5 Standard Variable Overhead Rate per Hour = $ 3.55 6 Actual Variable Overheads Rate per Hour = Actual Variable Overheads / Actual Hours Worked 7 Actual Variable Overheads Rate per Hour = 29,050 / 8,300 = $ 3.5 Actual Hours Worked = 8,300 Hours 9 Variable Overhead Rate Variance = (3.55 * 8,300) - (3.5 * 8,300) 12 Variable Overhead Rate Variance = $ 415 Favourable 8 un 16 17 Variable Overhead Efficiency Variance = (Standard Variable Overhead Rate per Hour * Standard Hours for Actual Production) - (Standard Variable Overhead Rate per Hour * Actual Hours) 18 19 Standard Variable Overhead Rate per Hour = $ 3.55 Sheet 1305 Sheet 1306 Sheet 1307 Sheet 1303 Sheet 1304 Working July Ready B 16096

A F G H 9 K M Variable Overhead Rate Variance = (3.55 * 8,300) - (3.5 * 8,300) Variable Overhead Rate Variance = $ 415 Favourable 12 15 16 2 2 17 Variable Overhead Efficiency Variance = (Standard Variable Overhead Rate per Hour * Standard Hours for Actual Production) - (Standard Variable Overhead Rate per Hour * Actual Hours) 18 19 20 Standard Variable Overhead Rate per Hour = $ 3.55 Actual Hours Worked = 8,300 Hours Standard Hours for Actual Production = 5,700 Hours Variable Overhead Efficiency Variance = (3.55 * 5,700) - (3.55 * 8,300) 21 22 24 25 27 Variable Overhead Efficiency Variance = $ 9,230 Unfavourable 28 29 1 Sheet 1303 Sheet 1304 Working July Sheet 1305 Sheet 1306 Sheet 1307 Ready 1609