Matterhorn,Inc., produces a special line of toy racing cars. Matterhorn produces the cars in batches. To manufacture each batch of the cars, Matterhorn must set up the machines and molds. Setup costs are batch-level costs and are fixed with respect to the number of setup-hours. A separate Setup Department is responsible for setting up machines and molds for each style of car. The following information pertains to July 2017: Calculate the following: a. the spending variance for fixed setup overhead costs; b. the budgeted fixed setup overhead rate; and c. the production-volume variance for fixed overhead setup costs. Actual Amounts Static-budget Amounts Units produced and sold 15,000 (Actual) 11,250 (Budgeted) Batch size (number of units per batch) 250 (Actual) 225 (Budgeted) Setup-hours per batch 5 (Actual) 5.25 (Budgeted) Total fixed setup overhead costs $12,000 (Actual) $9,975 (Budgeted)
Matterhorn,Inc., produces a special line of toy racing cars. Matterhorn produces the cars in batches. To manufacture each batch of the cars, Matterhorn must set up the machines and molds. Setup costs are batch-level costs and are fixed with respect to the number of setup-hours. A separate Setup Department is responsible for setting up machines and molds for each style of car. The following information pertains to July 2017: Calculate the following: a. the spending variance for fixed setup overhead costs; b. the budgeted fixed setup overhead rate; and c. the production-volume variance for fixed overhead setup costs. Actual Amounts Static-budget Amounts Units produced and sold 15,000 (Actual) 11,250 (Budgeted) Batch size (number of units per batch) 250 (Actual) 225 (Budgeted) Setup-hours per batch 5 (Actual) 5.25 (Budgeted) Total fixed setup overhead costs $12,000 (Actual) $9,975 (Budgeted)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Matterhorn,Inc., produces a special line of toy racing cars.
Matterhorn produces the cars in batches. To manufacture each batch of the cars,
Matterhorn must set up the machines and molds. Setup costs are batch-level costs and are fixed with respect to the number of setup-hours. A separate Setup Department is responsible for setting up machines and molds for each style of car. The following information pertains to July 2017:
Calculate the following:
a. the spending variance for fixed setup overhead costs;
b. the budgeted fixed setup overhead rate; and
c. the production-volume variance for fixed overhead setup costs.
|
Actual Amounts
|
Static-budget Amounts
|
Units produced and sold
15,000 (Actual)
11,250 (Budgeted)
Batch size (number of units per batch)
250 (Actual)
225 (Budgeted)
Setup-hours per batch
5 (Actual)
5.25 (Budgeted)
Total fixed setup overhead costs
$12,000 (Actual)
$9,975 (Budgeted)
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