1. Fayer Products Ltd. produces water glasses in batches. To manufacture a batch of glasses, Fayer must setup the machines and molds. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and molds for different styles of glasses.

   Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup hours. The following information pertains to July.

   	Actual Amounts	Static-budget Amounts
   Units produced and sold	15,000	11,250
   Batch size (number of units per batch)	250	225
   Setup hours per batch	5	5.25
   Variable overhead cost per setup hour	$40	$38
   Total fixed setup overhead costs	$14,400	$14,000

   Calculate the Production volume variance for fixed setup overhead costs

   		$4,666.67 unfavourable
   		$400 unfavourable
   		$1600 favourable
   		$4,666.67 favourable