volue: 66.66 points Logistics Solutions provides order fulfillment services for

Question

volue: 66.66 points Logistics Solutions provides order fulfillment services for dot.com merchants. The company maintains warehouses that stock itens 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 itern 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, 135,000 items were shipped to customers using 5,000 direct labor-hours. The company incurred a total of $14,750 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 $3.00 per direct labor-hour Required: 1. According to the standards, what variable overhead cost should have been incurred to fill the orders for the 135,000 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 Total variable overhead variance 0

Explanation / Answer

Statement showing computations Particulars Amount No of items shipped               135,000.00 Standard Labour hour per item                            0.04 Total DL hours allowed                   5,400.00 Standard VO cost per hour                            3.00 Total Standard VO cost                 16,200.00 Actual VO Cost                 14,750.00 Total Standard VO cost                 16,200.00 Total VO Variance                   1,450.00 Particulars Standard Actual Hours Rate amount Hours Rate amount Variable overhead                   5,400.00                      3.00            16,200.00              5,000.00                  2.9500            14,750.00 VORV = (SR-AR)AH VORV = (3 - 2.95)5000 VORV = 250 F VOEV = (SH-AH)SR VOEV = (5400 - 5000)3 VOEV = 1,200 F

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