Question: 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 fixed overhead costs on the basis of delivery time. MME's owner, Thomas Stewart, obtains the following information for May 2017 overhead costs:
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 variable overhead differently from its fixed overhead costs.