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Lukehart Industries Inc. produces air purifiers in batches. To manufacture a batch of the purifiers,...

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Accounting

Lukehart Industries Inc. produces 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 2022:

Budget Amounts Actual Amounts
Units produced and sold 10,000 9,500
Batch size (number of units per batch) 400 375
Setup hours per batch 6 5.5
Variable overhead cost per setup hour $50 $52
Total fixed setup overhead costs $18,250 $17,750

Calculate the efficiency variance for variable setup overhead costs.

Question 17Select one:

a.

$264.00 favourable

b.

$250.00 favourable

c.

$158.30 favourable

d.

$264.30 unfavourable

e.

$114.00 favourable

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