Answer the Following Questions Using the Information Below:
OzPlastic Co

question 47

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 variable set-up overhead costs.

• A)$3800 favourable
• B)$3800 unfavourable
• C)$1200 unfavourable
• D)$1200 favourable

Understand and calculate the effects of fixed manufacturing overhead costs on net operating income.

Analyze the impact of selling price, variable cost, and fixed costs on net operating income.

Calculate break-even points in terms of sales dollars and units.

Understand the impact of segment margins and common fixed expenses on overall net operating income.

---

Definitions:

Reliability

The extent to which an experiment, test, or measuring procedure yields the same result on repeated trials.

Statistical Analysis Software

Computer programs designed to perform statistical calculations and analysis on data sets.

Ex Post Facto Design

A research approach that examines the effects of an independent variable on a dependent variable after the events have occurred.

Focus Groups

Structured group discussions used to gather participants' attitudes, feelings, beliefs, and reactions to a specific subject or area of interest.