Item5

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Item 5

IWI Auto Parts Corporation located in Michigan manufactures auto accessories including floor mats and liners, and car covers. IWI's predetermined variable overhead rate is based on direct labor-hours.

In the most recent month, 110,000 products were shipped using 3,500 direct labor-hours. IWI incurred a total of $9,450 in variable overhead costs.

According to the corporation's standards, 0.03 direct labor-hours are required to fulfill an order for one product and the variable overhead rate is $2.75 per direct labor-hour.

Required:

1. What is the standard labor-hours allowed (SH) to ship 110,000 products to customers?

2. What is the standard variable overhead cost allowed (SH SR) to ship 110,000 products 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 "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.)