Exercise 9-6 Variable Overhead Variances [LO9-6) 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 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, 115,000 items were shipped to customers using 3,800 direct labor-hours. The company incurred a total of $10,450 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 $2.80 per direct labor-hour. Required: 1. What is the standard labor-hours allowed (SH) to ship 115,000 items to customers? 2. What is the standard variable overhead cost allowed (SHSR) to ship 115,000 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? (For requirements 3 and 4, Indicate the effect of each variance by selecting "P" for favorable, "U" for unfavorable, and "None" for no effect (l.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.) 1. Standard quantity of labor hours allowed 2. Standard variable overhead cost allowed 3. Variable overhead spending variance 4. Variable overhead rate variance Variable overhead officiency variance Problem 9-21 Multiple Products, Materials, and Processes [LO9-4, LO9-5) Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials-X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis): Product Alpha 6 Zeta 7 Raw Material X442 Y661 3.0 kilos 2.0 liters 5.0 kilos 5.0 liters Standard Labor Time Sintering Finishing 0.40 hours 1.00 hours 0.50 hours 1.20 hours Information relating to materials purchased and materials used in production during May follows: Material X442 Y661 Purchase Purchases Cost 15,700 kilos $51,810 16,700 liters $20,040 Standard Price $3.10 per kilo $1.30 per liter Used in Production 10,200 kilos 14,700 liters The following additional information is available: a. The company recognizes price variances when materials are purchased. b. The standard labor rate is $23.00 per hour in Sintering and $21.50 per hour in Finishing. c. During May, 1,450 direct labor-hours were worked in Sintering at a total labor cost of $35,090, and 3,020 direct labor-hours were worked in Finishing at a total labor cost of $70,970. d. Production during May was 2,300 Alpha6s and 700 Zeta7s. Required: 1. Complete the standard cost card for each product, showing the standard cost of direct materials and direct labor. 2. Compute the materials price and quantity variances for each material 3. Compute the labor rate and efficiency variances for each operation Complete this question by entering your answers in the tabs below
