VARIABLE OVERHEAD VARIANCES, SERVICE COMPANY Joven Inc. operates a delivery service for over 70 restaurants. The corporation has a fleet of vehicles and has invested in a sophisticated, computerized communications system to coordinate its deliveries. Joven has gathered the following actual data on last year’s delivery operations:

Deliveries made 42,000 Direct labor 30,000 direct labor hours @ $7.00 Actual variable overhead $138,000 Joven employs a standard costing system. During the year, a variable overhead rate of

$4.05 per hour was used. The labor standard requires 0.75 hour per delivery.

Required:

. Compute the standard hours allowed for actual deliveries made last year.

. Compute the variable overhead spending and efficiency variances.

Exercise