Jo Publishing Company specialises in printing specialty textbooks for a small but profitable university market. Due to the high set-up costs for each batch printed, Jo Publishing holds the book requests until demand for a book is approximately 500. At that point, Jo Publishing will schedule the set-up and production of the book. For rush orders, Jo Publishing will produce smaller batches for an additional charge of $400 per set -up. Budgeted and actual costs for the printing process for 2016 were:

Static-budget amounts Actual results

Number of books produced 300,000 324,000

Average number of books per set-up 500 480

Hours to set up printers 8 hours 8.2 hours

Direct variable cost per set-up hour $40 $39

Total fixed set-up overhead costs $105,600 $119,000

Required:1. What is the static budget number of set-ups for 2016?

2. What is the flexible budget number of set-ups for 2016?

3. What is the actual number of set-ups in 2016?

4. Assuming fixed set-up overhead costs are allocated using set-up hours, what is the predetermined fixed set-up overhead allocation rate?

5. Does Jo Publishing's charge of $400 cover the budgeted variable overhead cost of an order? The budgeted total overhead cost?

6. For variable set-up overhead costs, calculate the spending and efficiency variances.

7. For fixed set-up overhead costs, calculate the spending and the production-volume variances.

8. What qualitative factors should Ho Publishing consider before accepting or rejecting a special order?