Answer the Following Questions Using the Information Below

question 67

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 fixed setup overhead costs.

• A) $3,200 unfavorable
• B) $2,025 unfavorable
• C) $3,600 unfavorable
• D) $2,025 favorable

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Definitions:

Shoplifting

Shoplifting involves the unauthorized removal of goods from a store without payment.

Compensatory Damages

A money award equivalent to the actual value of injuries or damages sustained by the aggrieved party.

Tort Suit

A legal action brought by one party against another for a civil wrong that causes harm or loss, resulting in legal liability.

General Damages

In a tort case, an amount awarded to compensate individuals for the nonmonetary aspects of the harm suffered, such as pain and suffering; not available to companies.