Jo Nathan Publishing Company specializes in printing specialty textbooks for a small but profitable college market. Due to the high setup costs for each batch printed, Jo Nathan holds the book requests until demand for a book is approximately 500. At that point Jo Nathan will schedule the setup and production of the book. For rush orders, Jo Nathan will produce smaller batches for an additional charge of $400 per setup. Budgeted and actual costs for the printing process for 2012 were as follows:

Required1. What is the static budget number of setups for 2012?2. What is the flexible budget number of setups for 2012?3. What is the actual number of setups in 2012?4. Assuming fixed setup overhead costs are allocated using setup-hours, what is the predetermined fixed setup overhead allocation rate?5. Does Jo Nathan's charge of $400 cover the budgeted direct variable cost of an order? The budgeted total cost?6. For direct variable setup costs, compute the price and efficiency variances.7. For fixed setup overhead costs, compute the spending and the production-volume variances.8. What qualitative factors should Jo Nathan consider before accepting or rejecting a specialorder?

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Static-Budget Amounts Actual Results Number of books produced Average number of books per setup Hours to set up printers Direct variable cost per setup-hour Total fixed setup overhead costs 300,000 500 324,000 480 8.2 hours 8 hours $40 $39 $119,000 $105,600