EXERCISE 9-6 Variable Overhead Variances L09-6 Logistics Solutions provides order fulfillment 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 cus- romer, 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. 120.000 items were shipped to customers using 2,300 direct labor-hours. The company incurred a total of $7.360 in variable overhead costs. According to the company's standards, 0.02 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $3.25 per direct labor-hour. Required: 1. What is the standard labor-hours allowed (SH) to ship 120.000 items to customers? 2. What is the standard variable overhead cost allowed (SH X SR) to ship 120,000 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? EXERCISE 9-17 Direct Materials and Direct Labor Variances L09-4, LO9-5 Dawson Toys, Ltd.. produces a toy called the Maze. The company has recently created a standard cost system to help control costs and has established the following standards for the Maze toy: Direct materials: 6 microns per toy at $1.50 per micron Direct labor: 1.3 hours per toy at $21 per hour During July, the company produced 3.000 Maze toys. The toy's production data for the month are as follows: Direct materials: 25.000 microns were purchased at a cost of $1.48 per micron. 5.000 of these microns were still in inventory at the end of the month. Direct labor: 4.000 direct labor-hours were worked at a cost of $88,000. Required: 1. Compute the following variances for July: a. The materials price and quantity variances. b. The labor rate and efficiency variances. 2. Prepare a brief explanation of the possible causes of each variance