Answer the Following Question(s)using the Information Below

question 115

Multiple Choice

Answer the following question(s) using the information below.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:

-Calculate the production-volume variance for fixed setup overhead costs.

• A)$4,666.67 unfavourable
• B)$400 unfavourable
• C)$1,600 unfavourable
• D)$4,666.67 favourable
• E)$400 favourable

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Definitions:

Gross Profit

The difference between revenue and the cost of goods sold, indicating how efficiently a company uses labor and supplies in production.

FIFO Method

An inventory valuation method that assumes that the first items produced or purchased are the first used or sold.

Unit Costs Decreasing

A situation indicating that the expense incurred to produce a single unit of output is declining, often due to efficiencies or increased production scale.

Lowest Gross Profit

The smallest amount of profit generated from selling goods or services, calculated by subtracting the cost of goods sold from sales revenue.