QUESTION 3 ABC Variance Analysis (10 marks) Rollers Baked Goods makes artisan buns for high end restaurants in the area. The buns are made in standard batches of 100 buns. To bake a batch of buns, the production manager must setup the mixers and ovens. Setup costs are batch-level costs because they are associated with the batches of buns made rather than the individual buns made. 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 original static budget plan for April was to produce 12,500 buns. However, with sudden closure of in-dining due to COVID, the actual production was reduced to 11,550 buns. The following information also relates to April. Actual Static budget Amounts Amounts Batch size (number of buns per batch) 110 100 Setup hours per batch 3.4 4 Variable overhead cost per setup hour 533 $30 Total fixed setup overhead costs $39,240. $40,000 Required: a. Calculate the rate and efficiency variances for variable setup overhead costs. b. Calculate the rate and production-volume variances for fixed setup overhead costs. c. The production manager would like you to explain the variable overhead efficiency variance. Your explanation should include more than that it was favourable or unfavourable. It should explain the following using quantitative and qualitative analysis: 1. What the variance means in relation to the actual versus budgeted production 2. How much of the variance is due to a change in batch size and how much is due to a change in setup hours per batch