Hot Stuff Operates a Delivery Service for Local Restaurants, Delivering

question 66

Essay

Hot Stuff 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
Hot Stuff 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:

Subcutaneous Layer

The inner layer of skin composed of fat and connective tissue that provides insulation and padding for the body.

Hypodermis

Also known as the subcutaneous layer, this is the innermost layer of the skin, containing fat and connective tissue to provide insulation and cushioning.

Epidermis

The outermost layer of skin, acting as a barrier against environmental threats.

Apocrine Sweat Glands

Specialized sweat glands that usually open into hair follicles, found primarily in the underarms and genital area, secreting a milky sweat that can produce body odor when broken down by bacteria.