Reference no: EM132953174
Problem - Logistics Solutions provides order ful?llment services for dot.com merchants. The company maintains warehouses that stock items carried by its dotcom 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, 175,000 items were shipped to customers using 7,400 direct labor-hours. The company incurred a total of $24,790 in variable overhead costs.
According to the company's standards, 004 direct labor-hours are required to ful?ll an order for one item and the variable overhead rate is $3.40 per direct labor-hour.
Required -
1. What is the standard labor-hours allowed (SH) to ship175,000 items to customers?
2. What is the standard variable overhead cost allowed (SH X SR) to ship 175,000 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?
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