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, 165,000 items were shipped to customers using 6,800 direct labor-hours. The company incurred a total of $22,100 in variable overhead costs.

According to the companys standards, 0.04 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $3.30 per direct labor-hour.

Required:

1. What is the standard labor-hours allowed (SH) to ship 165,000 items to customers?

2. What is the standard variable overhead cost allowed (SH SR) to ship 165,000 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 "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do no 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 efficiency variance

Erie Company manufactures a mobile fitness device called the Jogging Mate. The company uses standards to control its costs. The labor standards that have been set for one Jogging Mate are as follows:

Standard Hours	Standard Rate per Hour	Standard Cost
24 minutes	$5.40	$2.16

During August, 8,670 hours of direct labor time were needed to make 19,700 units of the Jogging Mate. The direct labor cost totaled $45,084 for the month.

Required:

1. What is the standard labor-hours allowed (SH) to makes 19,700 Jogging Mates?

2. What is the standard labor cost allowed (SH SR) to make 19,700 Jogging Mates?

3. What is the labor spending variance?

4. What is the labor rate variance and the labor efficiency variance?

5. The budgeted variable manufacturing overhead rate is $4.70 per direct labor-hour. During August, the company incurred $48,552 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month.

(For requirements 3 through 5, 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.)

1.	Standard labor-hours allowed
2.	Standard labor cost allowed
3.	Labor spending variance
4.	Labor rate variance
	Labor efficiency variance
5.	Variable overhead rate variance
	Variable overhead efficiency variance