ight meals for a number of maior airlines. One of the company's products is grilled salmon in dill sauce with baby most recent week, the company prepared 4,000 of these meals using 960 direct labor-hours. The company paid these direct labor workers a total of $9,600 for this work, or $10.00 per hour. According to the standard cost card for this meal it should require 0.25 direct labor-hours at a cost of $9.75 per hour. new potatoes and spring vegetables. During the Required: 1. According to the standards, what direct labor cost should have been incurred to prepare 4,000 meals? How much does this differ from the actual direct labor cosť? 2. Break down the difference computed in (1) above into a labor rate variance and a labor effi- ciency variance. EXERCISE 10-3 Variable Overhead Variances [LO10-3] Logistics Solutions provides order fulfillment services for dot.com merchants. The company main- tains 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 company's 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. Required: 1. According to the standards, what variable overhead cost should have been incurred to fill the orders for the 120,000 items? How much does this differ from the actual variable overhead cost? Break down the difference computed in (1) above into a variable overhead rate variance and a variable overhead efficiency variance. 2. L010-3]
ight meals for a number of maior airlines. One of the company's products is grilled salmon in dill sauce with baby most recent week, the company prepared 4,000 of these meals using 960 direct labor-hours. The company paid these direct labor workers a total of $9,600 for this work, or $10.00 per hour. According to the standard cost card for this meal it should require 0.25 direct labor-hours at a cost of $9.75 per hour. new potatoes and spring vegetables. During the Required: 1. According to the standards, what direct labor cost should have been incurred to prepare 4,000 meals? How much does this differ from the actual direct labor cosť? 2. Break down the difference computed in (1) above into a labor rate variance and a labor effi- ciency variance. EXERCISE 10-3 Variable Overhead Variances [LO10-3] Logistics Solutions provides order fulfillment services for dot.com merchants. The company main- tains 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 company's 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. Required: 1. According to the standards, what variable overhead cost should have been incurred to fill the orders for the 120,000 items? How much does this differ from the actual variable overhead cost? Break down the difference computed in (1) above into a variable overhead rate variance and a variable overhead efficiency variance. 2. L010-3]
Cornerstones of Cost Management (Cornerstones Series)
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ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
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Chapter8: Budgeting For Planning And Control
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Question
10-3
![ight meals for a number of maior airlines. One of the company's
products is grilled salmon in dill sauce with baby
most recent week, the company prepared 4,000 of these meals using 960 direct labor-hours. The
company paid these direct labor workers a total of $9,600 for this work, or $10.00 per hour.
According to the standard cost card for this meal it should require 0.25 direct labor-hours at
a cost of $9.75 per hour.
new potatoes and spring vegetables. During the
Required:
1. According to the standards, what direct labor cost should have been incurred to prepare 4,000
meals? How much does this differ from the actual direct labor cosť?
2.
Break down the difference computed in (1) above into a labor rate variance and a labor effi-
ciency variance.
EXERCISE 10-3 Variable Overhead Variances [LO10-3]
Logistics Solutions provides order fulfillment services for dot.com merchants. The company main-
tains 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 company's 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.
Required:
1.
According to the standards, what variable overhead cost should have been incurred to fill the
orders for the 120,000 items? How much does this differ from the actual variable overhead
cost?
Break down the difference computed in (1) above into a variable overhead rate variance and a
variable overhead efficiency variance.
2.
L010-3]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F85e39e9b-3b6a-4fb6-8406-b63a567ff03b%2Fbb10e5ab-36f4-4c17-a4bf-ac519e2a0dd4%2F3sq38m.jpeg&w=3840&q=75)
Transcribed Image Text:ight meals for a number of maior airlines. One of the company's
products is grilled salmon in dill sauce with baby
most recent week, the company prepared 4,000 of these meals using 960 direct labor-hours. The
company paid these direct labor workers a total of $9,600 for this work, or $10.00 per hour.
According to the standard cost card for this meal it should require 0.25 direct labor-hours at
a cost of $9.75 per hour.
new potatoes and spring vegetables. During the
Required:
1. According to the standards, what direct labor cost should have been incurred to prepare 4,000
meals? How much does this differ from the actual direct labor cosť?
2.
Break down the difference computed in (1) above into a labor rate variance and a labor effi-
ciency variance.
EXERCISE 10-3 Variable Overhead Variances [LO10-3]
Logistics Solutions provides order fulfillment services for dot.com merchants. The company main-
tains 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 company's 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.
Required:
1.
According to the standards, what variable overhead cost should have been incurred to fill the
orders for the 120,000 items? How much does this differ from the actual variable overhead
cost?
Break down the difference computed in (1) above into a variable overhead rate variance and a
variable overhead efficiency variance.
2.
L010-3]
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