Bristol Fabricators, Inc., produces air purifiers in batches. To manufacture a batch of the purifiers,...
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Bristol Fabricators, Inc., produces air purifiers in batches. To manufacture a batch of the purifiers, Bristol Fabricators, 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:
Budget
Actual
Amounts
Amounts
Units produced and sold
14,100
13,000
Batch size (number of units per batch)
420
395
Setup-hours per batch
8
7
Variable overhead cost per setup-hour
$51
$55
Total fixed setup overhead costs
$36,300
$35,937
Calculate the production-volume variance for fixed overhead setup costs. (Round all intermediary calculations to two decimal places and your final answer to the nearest whole number.)
A. $363 favorable
B. $2,832 unfavorable
C. $2,832 favorable
D. $363 unfavorable
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