Answer the Following Questions Using the Information Below:
OzPlastic Co

question 138

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 production-volume variance for fixed set-up overhead costs.

• A)$400 unfavourable
• B)$400 favourable
• C)$4666.67 favourable
• D)$4666.67 unfavourable

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Definitions:

Balance Of Payments Surpluses

A situation where the total of a country's international transactions results in net earnings, with more credits from exports and capital income than debits for imports and overseas investments.

Recession

A significant decline in economic activity across the economy, lasting longer than a few months, typically visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Trade Surplus

The amount by which a nation’s exports of goods (or goods and services) exceed its imports of goods (or goods and services).

Trade Deficit

A situation where a country's imports of goods and services exceed its exports, leading to more money flowing out of the country than coming in.