Question 1 a. Activity be costing (6 marks): Jancroft Corporation produces a line of baseball caps in batches. To manufacture a batch of caps Jancroft Corporation must setup the cutting and sewing machines. 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 cutting and sewing machines for different styles of baseball caps. 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. Static-budget Actual Amounts Amounts Baseball caps produced and sold 15,000 14,400 Batch size (number of caps per batch) 500 450 Setup hours per batch 5 4 Variable overhead cost per setup hour $63 $58 Total fixed setup overhead costs $32, 100 $30,000 Required: Calculate the rate and efficiency variances for variable overhead setup costs. (3 marks) ii. Explain to the production manager what the efficiency variance tells us about the efficient usage of setup costs. Your answer should be specific to Jancroft and should use at least one pertinent figure from your calculations in part (i) (3 marks) MacBook Air