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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, 170,000 items were shipped to customers using 5,000 direct labor hours. The company incurred a total of $12,750 in variable overhead costs.

According to the company's standards, 0.03 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $2.6 per direct labor-hour.

What variable overhead cost should have been incurred to fill the orders for the 170,000 items?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9984569

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