Question 2 OVERHEAD VARIANCES IN THE SERVICE SECTOR (22 MARKS) UberTasty operates a meal home-delivery service in Christchurch. It has agreements with 20 restaurants to pick up and deliver meals to customers who phone orders to or order online from UberTasty. UberTasty uses standard and normal costing and allocates variable and fixed overhead costs on the basis of delivery time. Information for May 2018's overhead costs are displayed in Exhibit 2. Exhibit 2 UberTasty's Budgeted and Actual Information for May 2018 Actual results Static (Master) Budget Number of deliveries 8,600 12,000 Hours per delivery 0.70 Hours of delivery time 5,660 Variable overhead cost per hour of $1.75 delivery time Variable overhead costs $11,320 Fixed overhead costs $39,600 $33,600 (a) Required: For May 2018, calculate: (i) Actual hours per delivery (ii) Actual variable overhead cost per hour of delivery time (iii) Static budget hours of delivery time (iv) Static budget variable overhead costs (1 mark) (b) Calculate all the flexible budget amounts for May 2018 for the items in the left hand column of Exhibit 2. That is: (i) Number of deliveries (ii) Hours per delivery (iii) Hours of delivery time (iv) Variable overhead cost per hour of delivery time (v) Variable overhead costs (vi) Fixed overhead costs (3 marks) (c) Calculate the flexible budget and normal costing overhead variances for UberTasty for May 2018 in as much detail as possible. (8 marks) TURN OVER 9 ACCT222 (d) Provide the journal entry (or entries) to close all the variable and fixed overhead accounts, whilst simultaneously recognising the variable and fixed overhead standard costing variances. Narrations are not required. (4 marks)