Engineered and discretionary overhead costs. (20 minutes) Willem Nijmegen manages the warehouse of Stientje, NV, a mail-order firm.

Nijmegen is concerned about controlling the fixed costs of the 20 workers who collect merchandise in the warehouse and bring it to the area where orders are assembled for shipment. Each employee works 180 hours per month at a budgeted cost of Dfl 150 per hour. Studies show that it takes an average of 12 minutes for a worker to locate an article of merchandise and move it to the order assembly area, and that the average order is for two different articles. In August, Stientje processed 8,500 orders. Actual costs were Dfl 560,000. bj3 REQUIRED Calculate the spending and production-volume variances for Stientje using an engineered overhead cost approach.
Calculate the spending and production-volume variances for Stientje using a discretionary overhead cost approach.
Comment on the differences in the approaches to controlling costs under requirements 1 and 2.