The Newgard Shop (TNS) specializes in making fraternity and sorority tote bags for the college market. TNS produces bags in batch sizes of 160. For rush orders, TNS will produce smaller batches for an additional charge of $184 per setup. Budgeted and actual costs for the production process for 2020 are as follows: Click the icon to view the budgeted and actual costs.) Read the requirements Requirement 1. What is the static budget number of setups for 2020? Determine the formula, then compute the static budget number of setups. Static budget = number of setups Requirement 2. What is the flexible-budget number of setups for 2020? Determine the formula, then compute the flexible-budget number of setups. Flexible budget number of setups Requirement 3. What is the actual number of setups in 2020? Determine the formula, then compute the actual number of setups. Actual number of setups Requirement 4. Assuming fixed setup overhead costs are allocated using setup-hours, what is the predetermined fixed setup overhead allocation rate? First, determine the formula and compute the static budget number of hours. Static budget number of hours Now determine the formula and compute the predetermined fixed setup overhead allocation rate. Fixed overhead rate Requirement 5. Does TNS's charge of $184 cover the budgeted variable overhead cost of an order? The budgeted total cost? (Abbreviation: OH = Overhead.) Begin by determining the formula and computing the budgeted variable overhead cost of an order. Budgeted variable OH cost of a set Next, determine the formula and compute the budgeted fixed overhead cost of an order. Budgeted fixed OH cost of a setup The charge of $184 the budgeted incremental cost of a setup the budgeted full cost. Requirement 6. For direct variable setup costs, compute the price and efficiency variances. Begin by calculating the following amounts for the variable overhead. Actual input Actual costs Flexible incurred budgeted rate budget Variable overhead Now compute the price and efficiency variances using the amounts you calculated above. (Label the variance as favorable (F) or unfavorable (U).) Price Efficiency variance variance Variable OH Requirement 7. For fixed setup overhead costs, compute the spending and the production-volume variances. Same budgeted lump sum Actual costs regardless of Allocated incurred output level overhead Fixed overhead Now compute the spending variance and production-volume variances using the amounts you calculated above. (Label the variance as favorable (F) or unfavorable (U).) Spending Production-volume variance variance Fixed overhead Static budget number of hours 1 Data table rmula and coll = TNS's charg the formula 1 = Overhea Static-Budget Amounts Actual Results 177,600 160,000 160 100 5 8 $ 34 $ 37 $ 22,200 $ 24,600 Number of bags produced Average number of bags per setup Hours to set up machines Direct variable cost per setup-hour Total fixed setup overhead costs ormula and cd Print Done the budgeted incremental cost of a setup the budgeted full cost. direct variable setup costs, compute the price and efficiency variances
