variance and a labor efficiency variance. Exercise 6 (Variable Overhead Variances) Hunified, Inc., 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 Hunified, 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. Standard Costs and Operating Performance Measures 349 In the most recent month, 140,000 items were shipped to customers using 5,800 direct labor-hours. The company incurred a total of P15,950 in variable overhead costs. According to the company's standards, 0.04 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is P2.80 per direct labor-hour. Required: 1. What variable overhead cost should have been incurred to fill the orders for the 140,000 items? How much does this differ from the actual variable overhead cost? 2. Break down the difference computed in (1) above into a variable overhead spending variance and a variable overhead efficiency variance.
variance and a labor efficiency variance. Exercise 6 (Variable Overhead Variances) Hunified, Inc., 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 Hunified, 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. Standard Costs and Operating Performance Measures 349 In the most recent month, 140,000 items were shipped to customers using 5,800 direct labor-hours. The company incurred a total of P15,950 in variable overhead costs. According to the company's standards, 0.04 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is P2.80 per direct labor-hour. Required: 1. What variable overhead cost should have been incurred to fill the orders for the 140,000 items? How much does this differ from the actual variable overhead cost? 2. Break down the difference computed in (1) above into a variable overhead spending variance and a variable overhead efficiency variance.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter10: Standard Costing And Variance Analysis
Section: Chapter Questions
Problem 29BEA: Performance Report for Variable Variances Humo Company provided the following information: Required:...
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Please answer 1 and 2. Thank you.
Transcribed Image Text:variance and a labor efficiency variance.
Exercise 6 (Variable Overhead Variances)
Hunified, Inc., 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 Hunified, 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.
Transcribed Image Text:Standard Costs and Operating Performance Measures
349
In the most recent month, 140,000 items were shipped to customers using
5,800 direct labor-hours. The company incurred a total of P15,950 in
variable overhead costs.
According to the company's standards, 0.04 direct labor-hours are required
to fulfill an order for one item and the variable overhead rate is P2.80 per
direct labor-hour.
Required:
1. What variable overhead cost should have been incurred to fill the orders
for the 140,000 items? How much does this differ from the actual
variable overhead cost?
2. Break down the difference computed in (1) above into a variable
overhead spending variance and a variable overhead efficiency variance.
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