Jump Industries has decided to commence producing gym balls due to increased demand

from households for exercise equipment. The gym balls are prepared in batches. To prepare

a batch for production, Jump Industries must set up the machinery. The setup department is

responsible for setting up machines for the different sizes of gym balls to be produced.

The overhead costs associated with the setup consist of some costs that are variable and

some costs that are fixed with respect to the number of setup hours.

The company has provided the following data:

	Static Budget Amounts
Gym balls produced and sold	75,000
Batch size (number of units per batch)	500
Setup-hours per batch	7
Variable overhead cost per setup hour	$25
Total fixed setup overhead costs	$55,000
	Actual amounts
Gym balls produced and sold	77,000
Batch size (number of units per batch)	600
Setup-hours per batch	8
Variable overhead cost per setup hour	$28
Total fixed setup overhead costs	$58,000

a) Calculate the efficiency variance for variance overhead setup costs

b) Calculate the spending variance for variable overhead setup costs

c) Calculate the flexible-budget variance for variable overhead setup costs

d) Calculate the spending variance for fixed overhead setup costs

e) Calculate the production-volume variance for fixed overhead setup costs

f) Comment on the overhead variances calculated