Problem
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, 205,000 items were shipped to customers using 9,200 direct labor- hours. The company incurred a total of $33,580 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 $3.70 per direct labor-hour.
Task
A. What are the standard labor-hours allowed (SH) to ship 205,000 items to customers?
B. What is the standard variable overhead cost allowed (SH x SR) to ship 205,000 items to customers?
C. What is the variable overhead spending variance?
D. What are the variable overhead rate variance and the variable overhead efficiency variance?