Answer the Following Questions Using the Information Below

question 63

Multiple Choice

Answer the following questions using the information below:

Munoz, Inc., produces a special line of plastic toy racing cars. Munoz, Inc., produces the cars in batches. To manufacture a batch of the cars, Munoz, Inc., must set up the machines and molds. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and molds for different styles of car.

Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup-hours. The following information pertains to June 2015:

-Calculate the spending variance for variable overhead setup costs.

• A) $1,900 unfavorable
• B) $1,900 favorable
• C) $600 unfavorable
• D) $600 favorable

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Definitions:

Physical Examination

A comprehensive assessment by a healthcare provider to evaluate the body for signs of disease or medical conditions.

Price Floor

A government- or group-imposed price control or limit on how low a price can be charged for a product, service, or commodity.

Pounds

A unit of weight commonly used in the United States and the British imperial system, equal to 0.453592 kilograms.

Producer Surplus

The difference between the amount that producers are willing and able to sell a good for and the actual amount they receive.