Logistics Solutions provides order fulfillment services for dot.com merchants. The company maintains warehouses that stockitems carried by its dot.com clients. When a client receives an order from a customer, the order is forwarded to LogisticsSolutions, which pulls the item from storage, packs it, and ships it to the customer. The company uses a predeterminedvariable overhead rate based on direct labor-hours.In the most recent month, 195,000 items were shipped to customers using 8,600 direct labor-hours. The company incurred atotal of $30,530 in variable overhead costs.According to the company's standards, 0.04 direct labor-hours are required to fulfll an order for one item and the variableoverhead rate is $3.60 per direct labor-hour.Required:1. What is the standard labor-hours allowed (SH) to ship 195,000 items to customers?2. What is the standard variable overhead cost allowed (SH × SR) to ship 195,000 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?

The company generally sets standards to evaluate the performance during the manufacturing process.

Answered: Logistics Solutions provides order…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Logistics Solutions provides order fulfiliment 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, 125,000 items were shipped to customers using 4,400 direct labor-hours. The company incurred a total of $12,540 in variable overhead costs. According to the company's standards, 0.04 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $2.90 per direct labor-hour. Required: 1. What is the standard labor-hours allowed (SH) to ship 125,000 items to customers? 2. What is the standard variable overhead cost allowed (SH x SR) to ship 125,000 items to customers? 3. What is the variable overhead spending…
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