Logistics Solutions 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, 145,000 items were shipped to customers using 5,600 direct labor-hours. The company incurred a total of $17,080 in variable overhead costs. According to the company's standards, 0.04 direct labor-hour is required to fulfill an order for one item and the variable overhead rate is $3.10 per direct labor-hour. Required: 1. What is the standard labor-hours allowed (SH) to ship 145,000 items to customers? 2. What is the standard variable overhead cost allowed (SH x SR) to ship 145,000 items to customers? 3. What is the variable overhead spending variance? 4. What are the variable overhead rate variance and the variable overhead efficiency variance? Note: 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 4. Variable overhead efficiency variance
Logistics Solutions 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, 145,000 items were shipped to customers using 5,600 direct labor-hours. The company incurred a total of $17,080 in variable overhead costs. According to the company's standards, 0.04 direct labor-hour is required to fulfill an order for one item and the variable overhead rate is $3.10 per direct labor-hour. Required: 1. What is the standard labor-hours allowed (SH) to ship 145,000 items to customers? 2. What is the standard variable overhead cost allowed (SH x SR) to ship 145,000 items to customers? 3. What is the variable overhead spending variance? 4. What are the variable overhead rate variance and the variable overhead efficiency variance? Note: 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 4. Variable overhead efficiency variance
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Logistics Solutions 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, 145,000 items were shipped to customers using 5,600 direct labor-hours. The company incurred a total of
$17,080 in variable overhead costs.
According to the company's standards, 0.04 direct labor-hour is required to fulfill an order for one item and the variable overhead rate
is $3.10 per direct labor-hour.
Required:
1. What is the standard labor-hours allowed (SH) to ship 145,000 items to customers?
2. What is the standard variable overhead cost allowed (SH x SR) to ship 145,000 items to customers?
3. What is the variable overhead spending variance?
4. What are the variable overhead rate variance and the variable overhead efficiency variance?
Note: 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
4. Variable overhead efficiency variance
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education