Hot Meals Now (HMN) 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 HMN. HMN allocates variable and fixed overhead costs on the basis of delivery time. HMN’s owner, Asha Ahuja, obtains the following information for May 2017 overhead costs:

1. Compute spending and efficiency variances for HMN’s variable overhead in May 2017.
2. Compute the spending variance and production-volume variance for HMN’s fixed overhead in May 2017.
3. Comment on HMN’s overhead variances and suggest how Asha Ahuja might manage HMN’s variable overhead differently from its fixed overhead costs.

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Home Insert Page Layout A Formulas Data Review B Actual Static 1 Easy Meals Now (May 2017) Results Budget 2 Output units (number of deliveries) 8,600 12,000 3 Hours per delivery 0.70 4 Hours of delivery time 5,600 5 Variable overhead cost per hour of delivery time $1.75 6 Variable overhead costs $11,320 7 Fixed overhead costs $39,600 $33,600