Danskmat AS operates a home meal delivery service. It has agreements with 20 restaurants to pick up and deliver meals to customers who phone or fax in orders. Danskmat is currently examining its overhead costs for May 2022.

Variable-overhead costs for May 2022 were budgeted at DKK 20 per hour of home delivery time.

Fixed-overhead costs were budgeted at DKK 240 000. The budgeted number of home deliveries in May 2022 was 8000. Delivery time, the allocation base for variable- and fixed-overhead costs, is budgeted to be 0.80 hour per delivery.

Customers are charged DKK 120 per delivery. The delivery driver is paid DKK 70 per delivery.
Danskmat receives a 10% commission on the meal costs that the restaurants charge the customers who use Danskmat.
Required

1 Calculate spending and efficiency variances for Danskmat’s variable and fixed overhead in May 2022. Comment on the results.
2 How might Danskmat manage its variable-overhead costs differently from the way it manages its fixed-overhead costs?

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Actual results for May 2022 were: Variable overhead DKK 141 740 Fixed overhead DKK 276 000 Number of home deliveries 7 460 Hours of delivery time 5.595