Logistics Solutions provides order fulfillment services for dot.com merchants. The company malntalns warehouses that stock Items carried by Its dot.com clients. When a client recelves 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 varlable overhead rate based on direct labor-hours. In the most recent month, 185,000 Items were shipped to customers using 8,000 direct labor-hours. The company Incurreda total of $27,600 in varlable overhead costs. According to the company's standards, 0.04 direct labor-hours are required to fulfill an order for one Item and the varlable overhead rate is $3.50 per direct labor-hour. Requlred: 1. What is the standard labor-hours allowed (SH) to ship 185,000 Items to customers? 2 What Is the standard varlable overhead cost allowed (SH x SR) to ship 185,000 Items to customers? 3. What Is the varlable overhead spending varlance? 4. What Is the varlable overhead rate varlance and the varlable overhead efficiency varlance? (For requirements 3 and 4, Indicate the effect of each varlance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (I.e., zero varlance). Input all amounts as positive values. Do not round Inte

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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I have a few questions from the  last chapter that still don't understand can i get help.

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, 185,000 items were shipped to customers using 8,000 direct labor-hours. The company incurred a total of $27,600 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 $3.50 per direct labor-hour.

**Required:**

1. What is the standard labor-hours allowed (SH) to ship 185,000 items to customers?
2. What is the standard variable overhead cost allowed (SH × SR) to ship 185,000 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          |                  |
| 5. Variable overhead efficiency variance    |                  |
Transcribed Image Text: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, 185,000 items were shipped to customers using 8,000 direct labor-hours. The company incurred a total of $27,600 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 $3.50 per direct labor-hour. **Required:** 1. What is the standard labor-hours allowed (SH) to ship 185,000 items to customers? 2. What is the standard variable overhead cost allowed (SH × SR) to ship 185,000 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 | | | 5. Variable overhead efficiency variance | |
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