variance and a labor efficiency variance. Exercise 6 (Variable Overhead Variances) Hunified, Inc., 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 Hunified, 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. Standard Costs and Operating Performance Measures 349 In the most recent month, 140,000 items were shipped to customers using 5,800 direct labor-hours. The company incurred a total of P15,950 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 P2.80 per direct labor-hour. Required: 1. What variable overhead cost should have been incurred to fill the orders for the 140,000 items? How much does this differ from the actual variable overhead cost? 2. Break down the difference computed in (1) above into a variable overhead spending variance and a variable overhead efficiency variance.

variance and a labor efficiency variance. Exercise 6 (Variable Overhead Variances) Hunified, Inc., 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 Hunified, 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. Standard Costs and Operating Performance Measures 349 In the most recent month, 140,000 items were shipped to customers using 5,800 direct labor-hours. The company incurred a total of P15,950 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 P2.80 per direct labor-hour. Required: 1. What variable overhead cost should have been incurred to fill the orders for the 140,000 items? How much does this differ from the actual variable overhead cost? 2. Break down the difference computed in (1) above into a variable overhead spending variance and a variable overhead efficiency variance.

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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