Answer the Following Questions Using the Information Below

question 60

Multiple Choice

Answer the following questions using the information below:
Lukehart Industries, Inc., produces air purifiers. Lukehart, Inc., produces the air purifiers in batches. To manufacture a batch of the purifiers, Lukehart, Inc., must set up the machines and assembly line tooling. 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 tooling for different models of the air purifiers.
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 2011:

-Calculate the efficiency variance for variable setup overhead costs.

• A)$150 favorable
• B)$114 favorable
• C)$264 unfavorable
• D)$264 favorable

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Definitions:

Segmenting Markets

The method of segmenting a wide market of consumers or businesses, which typically includes both current and prospective customers, into smaller groups according to common traits they share.

Specialty Cake Shop

A bakery that focuses primarily on creating and selling unique or custom cakes for special occasions.

Baked Goods

Featured food products made from ingredients such as flour, sugar, and butter, that are typically cooked by baking.

Market Segmentation

The process of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers based on shared characteristics.