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:

Services

Economic activities that provide intangible products, such as education, healthcare, and financial and professional services, rather than physical goods.

Income Levels

Categories or ranges of income that differentiate various groups within a society, often used in analyzing economic and social status.

Saving

The portion of income not spent on current expenditures or taxes, typically set aside for future use or investment.

Disposable Income

Funds households can allocate for spending and saving purposes after income taxes are subtracted.