Maurice Tutor

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    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 12 Jul 2017 My Price 11.00

Spending and efficiency

Spending and efficiency ov erhead v arian c es, servi c e secto r .

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 cur- rently 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 fixed- overhead costs, is budgeted to be 0.80 hour per delivery.

 

Actual results for May 2008 were:

Variable overhead DKr 141 740

Fixed overhead DKr 276 000

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?

Answers

Maurice Tutor
(5)
Status NEW Posted 12 Jul 2017 09:07 AM My Price 11.00

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