Knee-Jerk Industries Operates a Delivery Service for Local Restaurants, Delivering

question 56

Essay

Knee-Jerk Industries operates a delivery service for local restaurants, delivering call-in, to-go meals for restaurant customers. Variable overhead costs are applied at the budgeted rate of $3 per driving hour. The typical roundtrip takes a driver 45 minutes to complete. Actual results for March follow.
Number of roundtrips run: 1,560
Hours of delivery time: 1,250
Variable overhead cost incurred: $3,450
Knee-Jerk uses flexible budgets and variance analysis to monitor performance.
Required:
A. Prepare a flexible-budget performance report that shows (1) actual variable overhead, (2) the amount of variable overhead that should have been incurred for the number of roundtrips taken, and (3) the variance between these amounts.
B. Compute the company's variable-overhead spending and efficiency variances.
C. Compare the variances that you computed in requirements "A" and "B," and comment on your findings.

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Definitions:

Operational Definitions

Specific descriptions of concepts involving the conditions of a scientific study.

Heritability

A measure of how much of the variation in a trait within a population is due to genetic differences.

Genetic Changes

Alterations in the DNA sequence that can lead to variations in traits or diseases.

Population

The total number of individuals or organisms of a particular species living in a specific area or region at a given time.