Universal Dive Products Ltd. makes high quality gear for scuba diving. Their top-quality mask is called Super Mask and is produced in batches. The two batch activities are setup (cost driver = setup hours) and quality inspection (cost driver = inspection hours). The company budgeted to produce 40,000 masks; however, actual production was 50,000. The pertinent ABC data for the upcoming period is as follows:

Quality

Setup Inspection

Static Budget:

Batch size (units per batch) 500 100

Cost driver (hours per batch) 6 2

Cost per hour $18 $25

Actual Result:

Batch size (units per batch) 400 80

Cost driver (hours per batch) 5 3

Cost per hour $16 $30

Required:

Calculate the flexible-budget rate and efficiency variances for the setup activity.

Show your work and step by step process as required.