Question - 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 2011:
Info: Budget Amounts: Actual Amounts:
Units produced and sold 10,000 9,000
Batch size 400 375
Setup hours per batch 6 5.5
Var. overhead cost per setup hour 50 52
Total fixed setup overhead costs 18,500 17,750
Required -
Calculate the efficiency variance for variable setup overhead costs.
Calculate the spending variance for variable setup overhead costs.
Calculate the flexible-budget variance for variable setup overhead costs.
Calculate the spending variance for fixed setup overhead costs.
Calculate the production-volume variance.