Answer the Following Questions Using the Information Below:
Coober Pedy

question 124

Multiple Choice

Answer the following questions using the information below:
Coober Pedy Industries produces air purifiers.Coober Pedy produces the air purifiers in batches.To manufacture a batch of the purifiers,Coober Pedy must set up the machines and assembly line tooling.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 tooling for different models of the air purifiers.
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:
$$\begin{array} { l r r } & \begin{array} { r } \text { Budget } \\\text { Amounts }\end{array} & \begin{array} { r } \text { Actual } \\\text { Amounts }\end{array} \\\text { Units produced and sold } & 10000 & 9000 \\\text { Batch size (number of units per batch) } & 400 & 375 \\\text { Set-up-hours per batch } & 6 & 5.5 \\\text { Variable overhead cost per set-up-hour } & \$ 50 & \$ 52 \\\text { Total fixed set-up overhead costs } & \$ 18000 & \$ 17750\end{array}$$
-Calculate the spending variance for fixed set-up overhead costs.

• A)$150 unfavourable
• B)$150 favourable
• C)$250 favourable
• D)$250 unfavourable

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Definitions:

Shares Of Stock

Shares of stock represent units of ownership interest in a corporation, giving shareholders a portion of the company's profits and assets.

Corporation

A legal entity that is separate and distinct from its owners, who are shareholders, and it has its own rights and liabilities distinct from those of its owners.

Federal Statutes

Laws enacted by the federal government of a country.

Proprietorship

A business structure owned by a single individual, where the owner is entitled to all profits and responsible for all debts and liabilities.