Chalmet, Inc., operates a delivery service for over 70 restaurants. Chalmet has a fleet of vehicles and has invested in a sophisticated computerized communications system to coordinate its deliveries. Chalmet has gathered the following data on last year's operations:
a. Deliveries made: 73,000
b. Direct labor: 52,000 delivery hours at $8
c. Actual fixed overhead: $710,000
d. Actual variable overhead: $160,000
Chalmet employs a standard costing system. During the year, the following rates were used: standard fixed overhead rate, $14 per delivery hour; standard variable overhead rate, $3.00 per hour. The labor standard requires 0.75 hour per delivery. (These rates were based on a standard normal volume of 50,000 delivery hours.)
Required
1. Compute the variable overhead spending and efficiency variances.
2. Compute the fixed overhead spending and volume variances.