(SOLVED) Danskmat AS operates a home meal delivery service It has


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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 2008.
Variable-overhead costs for May 2008 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 2008 was 8000. Delivery time, the allocation base for variable- and fixedoverhead costs, is budgeted to be 0.80 hour per delivery.
Actual results for May 2008 were:
Variable overhead ………………………………… DKr 141 740
Fixed overhead ………………………………….. DKr 276000
Number of home deliveries……………………… 7 460
Hours of delivery time ………………………… 5 595
Customers are charged DKr 120 per delivery. The delivery driver is paid DKr 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 2008. 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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