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Order Up, Inc., provides order fulfillment services for dot.com merchants
Solution Detail
Price: $1.00
  • From: Business,
  • Posted on: Tue 28 May, 2013
  • Request id: None
  • Purchased: 0 time(s)
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Request Description

 

Order Up, 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 Order Up, 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, 140,000 items were shipped to customers using 5,800 direct labor-hours. The company incurred a total of $15,950 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 $2.80 per direct labor-hour.

 

Required:

1a.

According to the standards, what variable overhead cost should have been incurred to fill the orders for the 140,000 items? (Omit the "$" sign in your response.)

1b.

How much does this differ from the actual variable overhead cost? (Input the amount as a positive value. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

2.

Break down the difference computed in (1) above into a variable overhead rate variance and a variable overhead efficiency variance. (Do not round intermediate calculations. Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

 

Solution Description

 

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Attachments
Ch10 Q4.docx
Ch10 Q4.docx