Home Insert Page Layout Formulas Data Review Static Budget 13,000 Actual Meals Made Easy (May 2017) Results 2 Output units (number of deliveries) 3 Hours per delivery 4 Hours of delivery time 5 Variable overhead cost per hour of delivery time 6 Variable overhead costs 7 Fixed overhead costs 8,750 0.70 5,600 $1.60 $10,640 $39,200 $36,400 1. Compute spending and efficiency variances for MME's variable overhead in May 2017. 2. Compute the spending variance and production-volume variance for MME's fixed overhead in May 2017. 3. Comment on MME's overhead variances and suggest how Thomas Stewart might manage MME's vari- able overhead differently from its fixed overhead costs. Required
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Overhead variances, service sector. Meals Made Easy (MME) operates a meal home-delivery service. It has agreements with 20 restaurants to pick up and deliver meals to customers who place orders on MME’s website. MME allocates variable and xed overhead costs on the basis of delivery time. MME’s owner, Thomas Stewart, obtains the following information for May 2017 overhead costs:
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