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Munoz Inc. produces a special line of plastic toy racing cars in batches. To manufacture a batch of the cars Munoz Inc. must setup the
Munoz Inc. produces a special line of plastic toy racing cars in batches. To manufacture a batch of the cars Munoz Inc. 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 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 2012: Actual Static-budget Amounts 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 fotal fixed setup overhead costs $14,400 $14,000 Calculate the ABC efficiency variance for variable setup overhead costs. $1900 unfavourable $600 favourable $1,900 favourable $600 unfavourable
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