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, 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 companys 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.

1.	Number of items shipped..................................
	Standard direct labor-hours per item................	_____
	Total direct labor-hours allowed........................
	Standard variable overhead cost per hour.........	$____
	Total standard variable overhead cost...............	$______
	Actual variable overhead cost incurred..............	$______
	Total standard variable overhead cost (above)..	______
	Spending variance............................................	$ ____	___

2.

Standard Hours Allowed for Actual Output, at Standard Rate (SH SR)		Actual Hours of Input, at Standard Rate (AH SR)		Actual Hours of Input, at Actual Rate (AH AR)
______ hours $_____ per hour = $______		______ hours $______ per hour = $________		_______ hours $_____ per hour* = $________
	Variable overhead efficiency variance = $____ __		Variable overhead rate variance = $____ __
	Spending variance = $____ __

*$7360/2300 hours = $_____ per hour

Alternatively, the variances can be computed using the formulas:

Variable overhead efficiency variance = SR(AH SH)

= $_____ per hour (______ hours _______ hours)

= $_____ ___

Variable overhead rate variance = AH(AR SR)

= _______ hours ($_____ per hour $_____ per hour)

= $_____ ___