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, 125,000 items were shipped to customers using 4,400 direct labor-hours. The company incurred a total of $12,540 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 $2.90 per direct labor-hour.

Required: A. According to the standards, what variable overhead cost should have been incurred to fill the orders for the 125,000 items? How much does this differ from the actual variable overhead cost? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Round labor-hours per item and overhead cost per hour to 2 decimal places.) # items shipped_______ standard DLH per item________ Total DLH _____ Stand variable over per_______ Total stand var. overhead______ actual var overhead________ total stand var overhead______ Total var overhead var________ B. Break down the difference computed in (1) above into a variable overhead rate variance and a variable overhead efficiency variance. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) ____________________

Dawson Toys, Ltd., produces a toy called the Maze. The company has recently established a standard cost system to help control costs and has established the following standards for the Maze toy: Direct materials: 7 microns per toy at $0.33 per micron Direct labor: 1.4 hours per toy at $6.60 per hour During July, the company produced 4,900 Maze toys. Production data for the month on the toy follow: Direct materials: 74,000 microns were purchased at a cost of $0.30 per micron. 31,125 of these microns were still in inventory at the end of the month. Direct labor: 7,460 direct labor-hours were worked at a cost of $54,458. Required: A.Compute the following variances for July: (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Do not round intermediate calculations. Round final answer to the nearest whole dollar.) a. The materials price and quantity variances. b. The labor rate and efficiency variances. ____________________

Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows: Standard Quantity Standard Price or Rate Standard Cost Direct materials 1.60 ounces $ 6.00 per ounce $ 9.60 Direct labor 0.90 hours $ 13.00 per hour 11.70 Variable MOH 0.90 hours $ 2.00 per hour 1.80 $ 23.10 During November, the following activity was recorded relative to production of Fludex: a. Materials purchased, 8,100 ounces at a cost of $46,980. b. There was no beginning inventory of materials; however, at the end of the month, 2,050 ounces of material remained in ending inventory. c. The company employs 15 lab technicians to work on the production of Fludex. During November, they worked an average of 170 hours at an average rate of $13.50 per hour. d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $4,800. e. During November, 3,100 good units of Fludex were produced . Required: 1. For direct materials: a. Compute the price and quantity variances. (Round your "price per ounce" answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

	__________	-	__________	*	__________	=	Variance
Materials price variance	__________		__________		__________			__________
	__________	-	__________	*	__________	=	Variance
Materials quantity variance	__________		__________		__________			__________

b. The materials were purchased from a new supplier who is anxious to enter into a long-term purchase contract. Would you recommend that the company sign the contract? ____ Yes ____ No 2. For direct labor: a. Compute the rate and efficiency variances. (Round your "rate per hour" answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

	__________	-	__________	*	__________	=	Variance
Labor rate variance	__________		__________		__________			__________
	__________	-	__________	*	__________	=	Variance
Labor efficiency variance	__________		__________		__________			__________

b.In the past, the 15 technicians employed in the production of Fludex consisted of 6 senior technicians and 9 assistants. During November, the company experimented with fewer senior technicians and more assistants in order to save costs. Would you recommend that the new labor mix be continued? ____ Yes ____ No

3. Compute the variable overhead rate and efficiency variances. (Round your "rate per hour" answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

	__________	-	__________	*	__________	=	Variance
Variable overhead rate variance	__________		__________		__________			__________
	__________	-	__________	*	__________	=	Variance
Variable overhead efficiency variance	__________		__________		__________			__________