Activity-based costing, batch-level variance analysis. Jo Nathan Publishing Company ©

specializes in printing specialty textbooks for a small but profitable college market. Due to 1. Static budget number the high setup costs for each batch printed, Jo Nathan holds the book requests until of setups, 400 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 $700 per setup.

REQUIRED 1. What is the static budget number of setups for 2009? 2. What is the flexible budget number of setups for 2009? 3. What is the actual number of setups in 2009? 4. Assuming fixed setup overhead costs are allocated using setup-hours, what is the predeter- mined fixed setup overhead allocation rate? 5. Does Jo Nathan's charge of $700 cover the budgeted variable overhead cost of an order? The budgeted total overhead cost? 6. For variable setup overhead costs, compute the spending 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 special order?LO1

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Budgeted and actual costs for the printing process for 2009 were: Static-Budget Amounts Actual Results 216,000 500 480 6.5 hours $90 Number of books produced Average number of books per setup Hours to set up printers Variable overhead cost per setup-hour Total fixed setup overhead costs 200,000 6 hours $100 $72,000 $79,000