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Exercise 9-6 (Algo) Variable Overhead Variances [LO9-6] Logistics Solutions provides order fulfilment services for dot com merchants. The company maintains warehouses that stock items carried
Exercise 9-6 (Algo) Variable Overhead Variances [LO9-6] Logistics Solutions provides order fulfilment services for dot com merchants. The company maintains warehouses that stock items carried by its dotcom clients. When a client recelves 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 varlable 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 $3.40 per direct labor-hour. Required: 1. What is the standard labot-hours allowed (SH) to ship 175,000 items to customers? 2. What is the standard variable overhead cost allowed (SH SR ) to ship 175,000 A Aems to customers? 3. What is the vatiable overhead spending variance? 4. What is the varlable overhead rate variance and the variable overhead efficiency variance? (For requirements 3 and 4 , Indicate the effect of each variance by selecting "F" for favorable, " U for unfavorable, and "None" for no effect (le., zero variance). Input all amounts as positive values. Do not round intermediate calculations.)
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