Exerclse $10-3($Algo$)$ Varlable Overhead Varlances $[$L$010-3]$

Logistics Solutions 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, $135,000$ items were shipped to customers using $5,000$ direct labor$-$hours. The company incurred a total of

$$14,750$ in variable overhead costs.

According to the company's standards, $0\mathrm{.}04$ direct labor$-$hour is required to fulfill an order for one item and the variable overhead rate

is $$3\mathrm{.}00$ per direct labor$-$hour.

Requlred:

What is the standard labor$-$hours allowed $($SH$)$ to ship $135,000$ items to customers?

What is the standard variable overhead cost allowed $($SH $SR)$ to ship $135\mathrm{.}000$ items to customers?

What is the variable overhead spending variance?

What are the variable overhead rate variance and the variable overhead efficiency variance?

Note: For requlrements $3$ and $4,$ Indleate the effect of each varlance by selecting $"$F$"$ for fovorable, $"$U$"$ for unfovorable, and

"None" for no effect $($l$.$e$.,$ zero varlance$).$ Input all amounts as positlve values. Do not round Intermedlate calculatlons.