Joven Inc. operates a delivery service for over 70 restaurants. The corporation has a fleet of vehicles and has invested in a sophisticated, computerized communications system to coordinate its deliveries. Joven has gathered the following actual data on last year’s delivery operations:
Deliveries made ……………………………….42,000
Direct labor ……………..……………………..30,000 direct labor hours @ $7.00
Actual variable overhead ……………………… $138,000
Joven employs a standard costing system. During the year, a variable overhead rate of $4.05 per hour was used. The labor standard requires 0.75 hour per delivery.
Required:
1. Compute the standard hours allowed for actual deliveries made last year.
2. Compute the variable overhead spending and efficiency variances.