(SOLVED) Willem Nijmegen manages the warehouse of Stientje NV a mail order


Question Description:

$19

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 €15 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 8500 orders. Actual costs were €56000.
Required
1. Calculate the spending and production-volume variances for Stientje using an engineered overhead cost approach.
2. Calculate the spending and production-volume variances for Stientje using a discretionary overhead cost approach.
3. Comment on the differences in the approaches to controlling costs under requirements 1 and 2.

Answer

$19