Spending and efficiency overhead variances, service sector. (20-25 minutes) Danskmat, AS, operates a home meal delivery service.
Question:
Spending and efficiency overhead variances, service sector. (20-25 minutes) 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 2000.
Variable-overhead costs for May 2000 were budgeted at DKr 20 per hour of home delivery time. Fixed-overhead costs were budgeted at DKr 240,000. The budgeted number of home deliveries in May 2000 was 8,000. Delivery time, the allocation base for variable- and fixed-overhead costs, is budgeted to be 0.80 hour per delivery.
REQUIRED 1. Calculate spending and efficiency variances for Danskmat’s variable and fixed overhead in May 2000. Comment on the results.
2. How might Danskmat manage its variable-overhead costs differently from the way it manages its fixed-overhead costs? ju7
Step by Step Answer:
Management And Cost Accounting
ISBN: 9780130805478
1st Edition
Authors: Charles T. Horngren, Alnoor Bhimani, Srikant M. Datar, George Foster