Munoz, Inc. produces a special line of plastic toy racing cars. Munoz, Inc. produces the cars in batches. To manufacture a batch of the cars, Munoz, Inc. must set up 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 car. 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 June 2010.

	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

Question: Calculate the spending variance for variable setup overhead costs.

		a) $600 favourable
		b) $600 unfavourable
		c) $700 unfavourable
		d) $7,500 favourable
		e) $7,500 unfavourable