Answer the Following Questions Using the Information Below:
OzPlastic Co

question 85

Multiple Choice

Answer the following questions using the information below:
OzPlastic Co.produces a special line of plastic toy racing cars.OzPlastic produces the cars in batches.To manufacture a batch of the cars,OzPlastic must set up the machines and moulds.Set-up costs are batch-level costs because they are associated with batches rather than individual units of products.A separate Set-up Department is responsible for setting up machines and moulds for different styles of car.
Set-up overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of set-up-hours.The following information pertains to June 2018:
$$\begin{array} { l r r } & \text { Actual } & \text { Static-budget } \\& \text { Amounts } & \text { Amounts } \\ \text { Units produced and sold } & 30000 & 22500 \\ \text { Batch size (number of units per batch) }& 250 & 225 \\\text { Set-up-hours per batch } & 5 & 5.25 \\ \text { Variable overhead cost per set-up-hour } & \$ 40 & \$ 38 \\\text { Total fixed setup overhead costs }& \$ 14400 & \$ 14000\end{array}$$
-Calculate the spending variance for fixed set-up overhead costs.

• A)$3600 unfavourable
• B)$400 unfavourable
• C)$400 favourable
• D)$3200 unfavourable

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Definitions:

Exercise Price

The price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset or stock.

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A type of bond that is purchased at a price lower than its face value, with the face value being repaid at the time of maturity. It does not pay periodic interest.

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