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What is the variable overhead spending variance

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Reference no: EM133050840

Problem - Logistics Solutions provides order ful?llment 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, 125,000 items were shipped to customers using 4,400 direct labor-hours. The company incurred a total of $12,540 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 $2.90 per direct labor-hour.

Required -

1. What is the standard labor-hours allowed (SH) to ship 125,000 items to customers?

2. What is the standard variable overhead cost allowed (SH >< SR) to ship 125,000 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?

Reference no: EM133050840

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