Foodies operates a meal home-delivery service. It has agreements with 20 restaurants to pick up and deliver meals to customers who place orders on the Foodies website. Foodies allocates variable and fixed overhead costs on the basis of delivery time. Foodies owner, Asha Ahuja, obtains the following information for May 2020 overhead costs:

Required

1. Compute spending and efficiency variances for Foodies variable overhead in May 2020.
2. Compute the spending variance and production-volume variance for HMN’s fixed overhead in May 2020.
3. Comment on HMN’s overhead variances and suggest how Asha Ahuja might manage HMN’s variable overhead differently from its fixed overhead costs.

Transcribed Image Text:

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 Actual Results 8,600 5,660 $11,320 $39,600 Static-Budget Amounts 12,000 0.70 $ 1.75 $33,600