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a. $250 favourable b. $114 unfavourable c. $1,800 unfavourable d. $250 unfavourable e. $1,800 favourable

a. $250 favourable b. $114 unfavourable c. $1,800 unfavourable d. $250 unfavourable e. $1,800 favourable

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Lukehart Industries Inc. produces air purifiers in batches. To manufacture a batch of the purifiers Lukehart Inc. must setup 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 2012: Units produced and sold Batch size (number of units per batch) O a. $250 favourable O b. $114 unfavourable Budget Amounts O c. $1,800 unfavourable d. $250 unfavourable O e. $1,800 favourable 10,000 400 6 $50 $18,000 Setup hours per batch Variable overhead cost per setup hour Total fixed setup overhead costs Calculate the production-volume variance for fixed setup overhead costs. Actual Amounts 9,000 375 5.5 $52 $17,750
Transcribed Image Text:Lukehart Industries Inc. produces air purifiers in batches. To manufacture a batch of the purifiers Lukehart Inc. must setup 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 2012: Units produced and sold Batch size (number of units per batch) O a. $250 favourable O b. $114 unfavourable Budget Amounts O c. $1,800 unfavourable d. $250 unfavourable O e. $1,800 favourable 10,000 400 6 $50 $18,000 Setup hours per batch Variable overhead cost per setup hour Total fixed setup overhead costs Calculate the production-volume variance for fixed setup overhead costs. Actual Amounts 9,000 375 5.5 $52 $17,750
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