Answer the Following Questions Using the Information Below:
Lukehart Industries

question 58

Multiple Choice

Answer the following questions using the information below:
Lukehart Industries, Inc., produces air purifiers. Lukehart, Inc., produces the air purifiers in batches. To manufacture a batch of the purifiers, Lukehart, Inc., must set up the machines and assembly line tooling. 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 tooling for different models of the air purifiers.
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:
$\begin{array}{lrr}&\text { Budget } & \text { Actual } \\&\text { Amounts } & \text { Amounts }\\\text { Units produced and sold } & 10,000 & 9,000 \\\text { Batch size (number of units per batch) } & 400 & 375 \\\text { Setup-hours per batch } & 6 & 5.5 \\\text { Variable overhead cost per setup-hour } & \$ 50 & \$ 52 \\\text { Total fixed setup overhead costs } & \$ 18,000 & \$ 17,750\end{array}$
-Calculate the production-volume variance for fixed overhead setup costs.

• A) $1,800 favorable
• B) $1,800 unfavorable
• C) $250 unfavorable
• D) $250 favorable

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Definitions:

Arterial Puncture

A medical procedure involving the insertion of a needle into an artery, typically to draw blood for diagnostic testing.

Precautionary Measure

Actions taken in advance to prevent potential hazards or to minimize risk in various situations, ranging from health care to environmental management.

Gavage Feeding

The process of supplying a nutritional substance directly into the stomach by inserting a tube through the nose or mouth.

School-age Child

A child who attends school and is typically between the ages of 6 and 12 years, a period marked by significant growth and development.