Meals on Wheels (MOW) operates a meal home-delivery service. It has agreements with 20 restaurants to pick up and deliver meals to customers who phone or fax orders to MOW. MOW allocates variable and fixed overhead costs on the basis of delivery time. MOW€™s owner, Josh Carter, obtains the following information for May 2013 overhead costs:

REQUIRED
1. Compute rate and efficiency variances for MOW's variable overhead in May 2013.
2. Compute the rate variance and production-volume variance for MOW's fixed overhead in May 2013.
3. Comment on MOW's overhead variances and suggest how Josh Carter might manage MOW's variable overhead differently from its fixed overhead costs.

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Actual Results Static Budget 10,000 0.70 Meals on Wheels (May 2013) Output units (number of deliveries) Hours per delivery Hours of delivery time Variable overhead cost per hour of delivery time Variable overhead costs Fixed overhead costs 8,800 5,720 1.50 S10,296 S38,600 $35,000