5 value 3.00 polnts Exercise 8-6 Variable Overhead Variances [LO8-6] Logistics S

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5 value 3.00 polnts Exercise 8-6 Variable Overhead Variances [LO8-6] Logistics Solutions provides order fultfillment services for dot.com merchants. The company maintains warehouses that stock items carried by its dot.com clients. When a cient receives an order froma customer, the order is forwarded to Logistics Solutions, which puills 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 incurred a total of $29,050 in variable overhead costs. According to the company's standards, 0.03 direct labor-hours are required to fulfil an order for one itern and the variable overhead rate is $3.55 per direct labor-hour Required: 1. According to the standards, what variable overhead oost should have been incurred to fillthe orders for the 190,000 items? How much does this differ from the actual variable overhead cost? (Round labor hours per item and overhead cost per hour to 2 decimal places.) Number of items shipped Standard direct labor-hours per item Total direct labor-hours allowed Standard variable overhead cost per hour Total standard variable overhead cost Actual variable overhead cost incurred Total standard variable overhead cost otal variable overhead variance 2 Break down the difference computed in (1) above into a variable overhead rate variance and a variable overhead efficiency variance. (Indicate the effect of each variance by selecting F for favorable U for unfavorable, and "None" for no effect (i.e., zero variance)) Variable overhead rate variance Variable overhead effliciency variance 2 O Type here to search

Explanation / Answer

1.

2.

Working:

Number of items shipped 190000 Standard direct labor hours per item 0.03 Total direct labor hours allowed 5700 Standard variable overhead cost per hour $ 3.55 Total standard variable overhead cost $       20,235 Actual variable overhead cost incurred $       29,050 Total standard variable overhead cost $       20,235 Total variable overhead variance $         8,815 U

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